MSCI to Add Bharti Airtel, Lundin Petroleum to Global Indexes After Review
Bharti Airtel Ltd. (BHARTI), India’s largest mobile-phone operator, and Lundin Petroleum AB (LUPE), Sweden’s oil and natural gas producer, will be added to MSCI Inc.’s global indexes after a semi-annual review.
Bharti and Sun Art Retail Group Ltd., a Chinese hypermarket operator, are among companies that will join the MSCI Emerging Markets Index, according to an MSCI statement dated Nov. 15. Lundin, Herbalife Ltd. and Kansas City Southern (KSU) of the U.S. will be the largest additions to the MSCI World Index. The changes will be made as of the close of trading on Nov. 30.
Amendments to indexes can alter share prices as passively managed funds buy and sell stocks to mirror the benchmark indexes. Some $321.9 billion was invested in exchange-traded funds linked to MSCI indexes at the end of October, according to MSCI. About $3 trillion of funds are benchmarked against its indexes globally.
“The inclusion is definitely positive for individual stocks in the short term,” Yoo Seong Sik, a fund manager at ING Investment Management Korea Ltd., which oversees about $16 billion. “While it’s a good thing to have a broader investor base with the additions, the overall stock-market direction has a bigger sway for longer-term performance.”
The MSCI World (MXWO) Index of 24 developed countries has lost 7.3 percent this year, while the MSCI Emerging Markets Index, a gauge of 21 developing nations’ markets, has dropped 17 percent as the European debt crisis heightened concern of slowing global economic growth.
MSCI makes decisions on membership and weightings based on a company’s market value, the average number of shares traded and the free float, or the percentage of shares available to investors. It also takes into account the representation of a company’s industry group and country in the indexes.
Bharti Airtel, which represents about 3.9 percent of the BSE India Sensitive Index, has climbed 13 percent this year. The stock today gained as much as 2.7 percent. Sweden’s Lundin Petroleum, which accounts for about 2.3 percent of the OMX Stockholm 30 Index, has more than doubled this year. Its shares rose 0.2 percent today.
First Pacific Co., a food, utilities and resources company controlled by billionaire Anthoni Salim, will replace clothing retailer Esprit Holdings Ltd. (330) in the MSCI Hong Kong Index, the index compiler said.
First Pacific shares gained 2.6 percent in Hong Kong, while Esprit slumped 4.3 percent. Esprit’s stock has plunged more than 90 percent from its peak in October 2007 as European rivals lured customers away.
China Resources Gas Group Ltd. (1193), the Hong Kong-listed fuel operator expanding in the mainland, and Haier Electronics Group Co. are among 10 companies to be added to the MSCI China (MXCN) Index, MSCI said. Chaoda Modern Agriculture (Holdings) Ltd., Greentown China Holdings Ltd. (3900) and Hidili Industry International Development Ltd. (1393) are among ten stocks that will be removed from the gauge, it said.
Idea Cellular Ltd. (IDEA) and Power Finance Corp., India’s largest lender to utilities, will join the MSCI India (MXIN) Index, while Housing Development & Infrastructure Ltd. (HDIL), Indiabulls Real Estate Ltd. (IBREL) and Steel Authority of India Ltd. (SAIL) will be deleted.
The MSCI Korea (MXKR) Index’s additions are CJ Corp. (001040), Korea Aerospace Industries Ltd., the country’s largest planemaker, Hyundai Marine & Fire Insurance Co., a non-life insurer, and snack maker Orion Corp. Three companies including Hanjin Heavy Industries & Construction Co. will be deleted, MSCI said.
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