Citic, BBVA set to launch equity resources index

Feb 20, 2011

The pair plan to develop and market investment products based on the Rogers Global Resources Equity Index throughout Europe, Latin America and Asia.

An environmental unit of Citic Group has signed a deal with Spain’s second biggest bank BBVA to create and market products based on the Rogers Global Resources Equity Index (RGREI).

Citic Carbon Assets Management, a platform created last May to spur development of low-carbon industries and investment in China, and Banco Bilbao Vizcaya Argentaria (BBVA) will jointly launch the RGREI index on February 28.

BBVA, which owns 15% of China Citic Bank and 30% of Citic Bank International, is acting as technical adviser and plans to create a number of investment products based on RGREI indices to cater to different investors and distribute them through its branch network across Europe, Latin America and Asia.

Citic International will offer the products to mainland and Hong Kong investors through the group’s commercial banking platform, according to Dou Jianzhong, chairman of Citic Carbon Assets Management, executive director and vice-president of Citic Group.

The main RGREI index, developed by commodities and resources bull Jim Rogers, will comprise 200 stocks in five sub-sectors, including agriculture, alternative energy, forestry, energy, and metals and mining.

The selection criteria of the stocks are both qualitative and quantitative, with emphasis given to the type and prospect of the businesses. Care is also taken to ensure there is sufficient trading liquidity in the selected underlying component stocks, according to a statement.

“Worldwide demand for raw materials can only increase and the RGREI indices are carefully designed to include companies with the soundness, foresight, commitment and capability of addressing this demand,” notes Rogers.

RGREI indices are built for medium- to long-term investors, with an emphasis on sector allocation based on lifestyle consumption and the stability of the underlying company. The indices incorporate baskets of established global resources companies exposed to both traditional (agriculture, metals and mining, and energy) and alternative resources (solar, wind, hydro).

These indices are regularly rebalanced according to a fixed set of rules for each index. The investible RGREI Core index will be equal-weighted to provide a diversification effect for clients. The index committee will be chaired by Rogers and the index calculation will be carried out by an independent agent.