METHODOLOGY OVERVIEW
The Dow Jones China Offshore50
Index intends to represent the largest stocks of companies
whose primary operations are in mainland China but that trade
on the exchanges of Hong Kong and the U.S.
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INDEX UNIVERSE
A security is included in the index universe if the
company primarily operates in mainland China but lists
overseas. Eligible stocks include H shares, red chips,
ADRs/ADSes and U.S.-listed only stocks.
If a security is listed on two or more overseas exchanges
(e.g. an H share also trades as an ADR), only the security
with the higher trading volume is included in the selection
universe.
Securities that have had more than 10 nontrading days
during the past three months are excluded from the index
universe. Securities also are subject to an additional
liquidity screen.
STOCK SELECTION
1. Within each of the 18 Supersectors defined by the
Industry Classification Benchmark (ICB), stocks in the
index universe are ranked by float-adjusted market capitalization.
2. The largest stocks are added to a selection list
until the market-cap coverage of each Supersector is
as close to 60% as possible.
3. Any current index component not already on the selection
list is added to it.
4. Stocks on the selection list are ranked by float-adjusted
market capitalization.
5. The largest 50 stocks are included in the index,
selecting current components first and then moving to
noncomponents, subject to the following buffer rules:
Any current index component ranked 61 or lower is replaced
by the highest-ranked noncomponent stock.
Any noncomponent stock ranked 40 or higher replaces
the lowest-ranked current index component.
REVIEW FREQUENCY
The index composition is reviewed semiannually, in
March and September. The index is also reviewed on an
ongoing basis to account for corporate actions such
as mergers, delistings or bankruptcies.
MONTHLY SELECTION LIST
A selection list is created each month and to coincide
with any large IPO. The list indicates possible changes
in the composition of the index at the next semiannual
review and is used to determine replacements for stocks
that are removed from the index due to mergers or financial
distress. If a noncomponent stock ranks among the top
25 on the list by float-adjusted market capitalization,
it is added to the index immediately. A qualified IPO
(among the top 25) is normally added to the index after
two trading days.
HISTORICAL DATA AVAILABILITY
Historical index values are available daily back to
December 31, 2000. The base value of the index is set
at 1000 as of that date.
WEIGHTING
The index is weighted based on float-adjusted market
capitalization. The weights of individual components
are capped at 10% of the float-adjusted market capitalization
of the index. Necessary adjustments are made by applying
weighting cap factors during the semiannual composition
reviews.
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