Russell Investments will add 121 initial public offerings (IPOs) to the Russell Global Index at the close of equity markets on Friday, Dec. 21. This total includes 36 U.S.-based IPOs that will be added to the U.S. broad-market Russell 3000® Index. The additional 85 companies are headquartered in 28 other countries with China, Brazil and India leading that list.
"Our systematic review of the global market for IPOs during the fourth quarter continued to reflect a healthy environment for stock growth worldwide," said Guillermo Cano, global policy manager for Russell Indexes. "We’ll add IPOs from every region of the world, including Morocco, Austria, Thailand and South Africa, in order to truly represent the investment opportunity set worldwide in a timely way."
A dozen IPOs in Latin America, for example, will be added to the Russell Latin America Index, including two in Mexico and one in Chile.
“Among IPO additions for the fourth quarter is BOVESPA, the Brazilian stock exchange, which was heavily oversubscribed and is currently trading at almost 50% above its subscription price,” said Cano.
The Russell Latin America Index already was weighted heavily with Brazilian-based companies as nine of the top 10 firms based on market capitalization are headquartered in Brazil. The index also has reflected very positive returns for 2007 with a year-to-date gain of 54.8% through Dec. 14.
“Stocks in three of the BRIC countries — Brazil, China, and India — continue to show strong growth rates in both IPO activity and total returns,” said Cano. “However, no Russian-based companies are on this quarter’s IPO additions list.”
The IPOs set for inclusion to the Russell Global Index include five stocks that will move directly into the Russell Global Large Cap Index, including two U.S. stocks that will be added to the large-cap Russell 1000® Index.
In terms of sector designation, the financial services sector will see the largest increase from this quarter’s IPO additions as measured by both the combined market capitalization of this quarter’s IPOs and total number of IPO additions. However, the tilt toward financial services isn’t quite as strong for the U.S. market, where the technology and health care sectors lead the additions list with eight stocks each.
Inclusion in the various Russell Indexes is determined by market capitalization. Russell weights members of each index by float-adjusted market capitalization and explicitly excludes “locked-up” shares from IPO weights. As IPOs are added each quarter, Russell does not delete existing members to make room, but fully reconstitutes each index annually at the end of the second quarter.
Russell has posted at www.russell.com/Indexes separate lists of IPOs slated for addition to the Russell Global Index as well as these leading U.S. benchmarks: Russell 3000, large-cap Russell 1000® Index, small-cap Russell 2000® Index, and Russell Microcap® Index.
About Russell
Russell Investments provides strategic advice, world-class implementation, state-of-the-art performance benchmarks and a range of institutional-quality investment products. Russell has more than $231 billion in assets under management as of Sept. 30, 2007, and serves individual, institutional and advisor clients in more than 40 countries. Russell’s industry-leading indexes have $4.4 trillion in assets benchmarked to them. Founded in 1936, Russell is a subsidiary of The Northwestern Mutual Life Insurance Company. Headquartered in Tacoma, Wash., Russell has additional offices in Amsterdam, Auckland, Hong Kong, Johannesburg, London, Melbourne, New York, Paris, San Francisco, Singapore, Sydney, Tokyo and Toronto.
Russell Investments, a Washington, USA corporation, operates through subidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.
Indexes are unmanaged and cannot be invested in directly.