RSSShipping Index Announcement
By Chip Hanlon | August 14, 2008 | 11:47 AM | 6 Comments
We put this out via press release this morning, so I thought I'd post it here, fyi:
Delta Global Indices Introduces Global Shipping Index
Delta Global Shipping Index to Track 30 Global Maritime Shipping Companies with
Combined Market Cap near $50 Billion and an expected dividend yield of approximately 8.25%
New York, NY, August 7, 2008 - Delta Global Indices today announced the introduction of the Delta Global Shipping Index (Index Ticker: DGAGSI), which tracks the rapidly growing global shipping sector. The Index consists of 30 maritime shipping stocks, including DryShips, Inc. (NSDQ: DRYS), Diana Shipping Inc. (NYSE: DSX), Excel Maritime Carriers, Ltd. (NYSE: EXM), Genco Shipping & Trading Ltd. (NYSE: GNK) and General Maritime Corp. (NYSE: GMR). Standard & Poor's Index Services will publish the Index, which was developed and is maintained by Delta Global Indices, LLC, an affiliate of Delta Global Advisors, Inc. Delta Global Indices, LLC specializes in global markets index development.
The Delta Global Shipping Index has been licensed to Claymore Advisors, LLC, which anticipates launching a global shipping exchange-traded fund (ETF). "The creation of the Delta Global Shipping Index stems from the growth of the shipping sector and its maturation in terms of investment depth," said Chip Hanlon, Chairman and Chief Executive Officer of Delta Global Indices, LLC. "The index is meant to provide representative exposure to this important and high-yielding industrial group."
Shipping Capacity
In the oil tanker industry, the phasing out of single hull tankers is scheduled to be complete by 2010. A strong supply of new ships coming to market is keeping tanker rates relatively well-balanced. On the other hand, a shortage in bulk dry vessels that ship iron ore and other essential commodities is leading to significantly higher shipping rates in this industry. Meanwhile the container industry remains fairly well-balanced, with strong demand having recently absorbed new shipping supply.
Shipping Rates
Even in the context of generally increasing supply in the oil tankers, containers, and dry bulk shipper industries, freight rates remain strong, reflecting surging shipping demand and continued economic growth around the globe. Not unlike what helped drive the commodity boom in recent years, some of today's remaining shipping bottlenecks result from a lack of new investment in the 1990s. Backlogged demand for increased shipping capacity remains, which continues to give charterers the upper hand in terms of daily shipping rates.
The Index Methodology
1. All global publicly-traded companies with any connection to the maritime shipping industry are identified by company description database searches and bottom-up industry research of publicly available information and databases.
2. Based on a review of the company's public filings and company description information, companies that are identified through the initial search are put into two groups:
A) "Qualifying" group: companies that generate in excess of 80% of their revenues (significant) from the operating and/or leasing of seaborne ships which transport dry bulk, tanker, container, specialty chemical or LNG goods.
B) "Excluded" Group: companies which, based on their public filings and company description information, are either not involved in seaborne shipping of the goods described above or, if they are, receive less than 80% of their overall revenues from such operations.
3. From the securities in the Qualifying group, securities eligible for inclusion in the Index must be listed on a developed market exchange, have a minimum market capitalization greater than or equal to $250 million at the reference date preceding each reconstitution and have a minimum 30-day average daily trading volume of $2 million (measured in U.S. dollar terms) at the reference date preceding each reconstitution. Securities in the Qualifying group which do not meet these liquidity and market cap criteria are excluded from consideration as an Index constituent. From the remaining universe, all securities listed on a major U.S. stock exchange shall be included. Should more than 30 U.S.-listed securities qualify, the 30 most liquid of these equities will be included; should fewer than 30 U.S. listed securities qualify, equities listed globally on developed market exchanges will be included to complete the list of 30, in order of their average daily volumes measured in U.S. dollar terms. Companies eligible for inclusion in the Index must have their shares listed on a major stock exchange in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United States or the United Kingdom.
Once the 30 index constituents are determined, a modified dividend weighting mechanism is applied to constitute the final index, with higher-yielding securities based on their indicated dividend yield being more highly weighted according to a proprietary methodology created by the Index Provider.
4. The Delta Global Shipping Index will be re-constituted annually, with re-balancing occurring quarterly according to the rules of index construction. Should a company in the index cease to be traded due to a merger, bankruptcy or other event, that constituent will be replaced immediately by the next qualifying security not currently included in the index. The new security will be included at a weighting equal to that of the removed security as of the date of its deletion from the index, and will be subject to being re-weighted at the next scheduled index rebalancing.
The Delta Global Shipping Index is calculated and distributed by Standard & Poor's and is available via leading quote vendors.
About Delta Global Indices
Delta Global Indices, LLC is an un-registered, wholly-owned affiliate of Delta Global Advisors Inc. Delta Global Advisors, Inc is a federally-registered investment advisor. Delta Global's founder and president, Charles "Chip" Hanlon is a contributing writer for TheStreet.com and a widely-followed authority on foreign markets, currencies and commodities. Delta Global is focused on providing specialized global investment strategies and consulting on specialized investment themes with institutional clients.
(end release)
*I also discuss this index in a video interview with Jim Slagle here
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Comments (6) | Related Topics » New ETFs | Hanlon's Pub | Shipping
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