European equity index provider Stoxx has launched 22 Dow Jones Stoxx sector indices following its adoption of the revised Industry Classification Benchmark system, and licensed two new real estate indices to derivatives exchange Eurex to underlie index futures and options.
The ICB system classifies companies according to their primary source of revenue. It now consists of 10 industries, 19 supersectors (previously 18), 41 sectors (previously 39) and 114 subsectors (previously 104).
Within the Stoxx universe, changes have been made within the current financials, oil and gas, and utilities supersectors. Real estate has been elevated to a supersector level, differentiating between real estate investment and services and real estate investment trusts on a sector level.
Three sectors have been added on the Supersector and Sector level, leading to the addition of 22 new indices in the Dow Jones Stoxx Global 1800, Dow Jones Stoxx 600, Dow Jones Euro Stoxx, Dow Jones Stoxx ex UK, Dow Jones Stoxx Total Market and Dow Jones Stoxx Nordic Total Market sector index families.
'The Dow Jones Stoxx Sector Indexes offer an alternative view of the performance of the European stock market,' says Stoxx supervisory board chairman Werner Bürki. 'The enhanced classification system, combined with a transparent and rules-based methodology, makes our sector indexes an ideal instrument for research and analysis. Our advanced benchmarks are broadly used as underlying for investment products.'
The Dow Jones Stoxx 600 Real Estate and Dow Jones Euro Stoxx Real Estate indices have been licensed to European derivatives exchange and clearing house Eurex as the basis for equity index futures and options. Both new futures will be included in Eurex's existing market-making programmes for sector index futures and options.
'The indexes enable us to offer our clients targeted investment opportunities in the real estate sector for the first time,' says Peter Reitz, a member of the Eurex executive board. 'The futures and options on the Dow Jones Stoxx real estate indexes allow hedging and investment strategies in companies that are active in the European real estate sector.'
Eurex says the new products complement its existing supersector derivatives, with the same contract specifications and benefits such as cost-efficient straight-through processing along with elimination of counterparty risk for order book and wholesale trading.
The first Eurex sector products were introduced in 2001, and their trading volume has grown to more than eight million contracts so far in 2008. Over the past two years, the exchange says, investor focus has increasingly shifted from the euro zone to the wider European market. Open interest in options and futures on sector indices currently stands at some 890,000 contracts, which corresponds to a nominal value of more than EUR13bn.
Launched on June 15, 1998, the Dow Jones Stoxx 600 Supersector Indexes aim to represent the largest European companies in each of the now 19 ICB supersectors in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK.
The Dow Jones Euro Stoxx Supersector Indexes, also launched on June 15, 1998, consist of the largest supersector companies in the euro zone, currently covering Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
The 19 supersectors are automobiles and parts, banks, basic resources, chemicals, construction and materials, financial services, food and beverage, health care, industrial goods and services, insurance, media, oil and gas, personal and household goods, real estate, retail, technology, telecommunications, travel and leisure, and utilities.