Indice Bovespa (BVSP)

This article describes an index that measures the performance of an exchange, industry or a geographic region. View articles referencing this index.

 

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Advait Pandey

The Bovespa Index (IBovespa) is the main indicator of the average performance of the BM&FBovespa exchange. The IBovespa covers more than 80% of the trades and approximately 70% of the market capitalization of the exchange^[1].

Calculations and Weighting

The IBovespa uses the Negotiability index to calculate the criteria and weighting of the stocks on the index. The Negotiability Index helps us understand the representation of the stock in the cash market on the exchange, which allows us to ascertain the participation of every component of the IBovespa. This is similar to the Free float method used by various indices using the market capitalization method for calculating the index level.

• Negotiabiliy Index = ^[2]
  • ni = number of trades carried out for stock "i"
  • vi = value created from the trades of stock "i"
  • N = Total number of trades on the BM&F Bovespa
  • V = Total value created by the N number of trades in the BM&F Bovespa

Composition

Criteria for Inclusion in the Portfolio

The Ibovespa is composed by the stocks that must meet the criteria as stipulated by the exchange^[3]:

• They should have been traded on the exchange in the past twelve months.
• To be included in the group of stocks whose negotiability indexes added represent 80% of the total value of all individual negotiability indexes.
• The trading share of the stock should be higher than 0,1% of the total share flow in the exchange.
• More than 80% of the shares of the stock must be traded on the exchange.

List of companies

The composition of the IBovespa, as of October 22, 2008:^[4]

References

1. ↑ IBovespa Calculation
2. ↑ Calculating the Negotiability Index for the IBovespa
3. ↑ Methodological Aspects
4. ↑ IBovespa Portfolio Calculation