Brazil stock exchange proposes changes to benchmark index
SAO PAULO Aug 22 (Reuters) - Brazilian financial bourse BM&F Bovespa SA has unveiled potential changes to its benchmark Ibovespa stock index to better reflect the performance of local shares.
A reformulation of the index is still being discussed with market participants and a final decision will be made by Sept. 13, according to an announcement posted on the exchange operator's website late on Wednesday.
The Ibovespa, a gross total return index, has grouped the most-traded stocks in the São Paulo Stock Exchange with the same formula since its inception in 1968.
Many investors have recently called for modifications to the formula, pointing to the comparatively heavy weighting of commodities exporters, which have underperformed stocks linked to domestic consumption in recent quarters.
In particular, investors have complained about the heavy weighting of oil producer OGX Petroleo e Gas Participacoes SA , controlled by tycoon Eike Batista.
OGX shares have tumbled more than 84 percent this year alone and have contributed to making the Ibovespa one of the world's worst-performing indexes.
Under the new plan, stocks that trade at an average price of less than one real over a period of two index rebalancings, such as OGX, would be excluded from the index.
Among other changes, stocks forming part of the index would need to account for more than 85 percent of trades in the equities cash market, up from 80 percent currently, according to the proposal.
Changes to the index could be phased in over three portfolio rebalancings or all at once, the exchange said. Regardless, implementation would not begin until January 2014.
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