SOURCE: Russell Investments

Russell Investments

July 12, 2011 21:12 ET

Russell Annual Reconstitution Sees Increase in Hong Kong Market Cap, Despite Transfer of 117 Companies to China

SINGAPORE--(Marketwire - Jul 12, 2011) - Russell Investments has reassigned over 100 Chinese companies to the China Index as part of its annual reconstitution process to maintain accurate equity benchmarks. Despite this, Hong Kong still saw a rise in its market capitalization to $752 billion, which is an increase of over 13% from $665 billion in 2010.

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"Our annual process to fully reconstitute the Russell Global Index shows a solid increase in Hong Kong's market capitalization," said Rolf Agather, managing director for index research and innovation for Russell Investments. "This year, through our increased methodology for the Hong Kong Index reconstitution, we were able to reassign 117 companies to the Russell China Index."

Other highlights from the annual reconstitution include:

  • As of 2011, Hong Kong had a total of 153 securities represented in the index
  • Following a decrease of 13.5% from 2009 to 2010, the Financial Services sector showed a huge upward swing, rebounding by 9.7 percentage points from 46.6% to 56.3%
  • 117 companies were reassigned from Hong Kong to China, up from 48 in 2011. This year, in addition to researching a company's revenue and government holdings, the process now takes into account a list of Red chip companies provided by the Hong Kong Stock Exchange which helps to identify China-based companies listed on the Hong Kong Stock Exchange, whose business is tied to, or controlled by China
  • Hong Kong added 18 securities in 2011 which is a significant drop from 90 in 2010

Russell's index reconstitution process is followed closely by many investors because $3.9 trillion in assets are benchmarked against them, and they account for an industry-leading 63.3% of institutional benchmarked products. Membership in Russell's equity indexes -- widely used as benchmarks for both passive and active investment strategies -- is determined by objective rules. Accurate benchmarks are an integral part of Russell's ongoing process to monitor more than 8,000 investment manager products worldwide for its $161 billion investment management business.