The Bovespa Index (Portuguese: Índice Bovespa), best known as Ibovespa is the benchmark index of about 86 stocks[1] traded on the B3 (Brasil Bolsa Balcão), accounting for the majority of trading and market capitalization in the Brazilian stock market. It is a weighted measurement index.
Overview
[edit]![](Https://upload.wikimedia.org/wikipedia/commons/thumb/f/fb/Bovespa_94_19_log2_2k_128k.png/300px-Bovespa_94_19_log2_2k_128k.png)
The index is a total return index composed by a theoretical portfolio as follows:[2] Selection criteria: Being amongst the eligible stocks that account for 85% in descending order by individual tradability ratio (IN); Traded in 95% of the trading sessions; 0.1% of the value traded on the cash equity market (round lots); and must not be a penny stock. It is weighted by free float.
It is revised on a 4-month portfolio cycle in January, May, and September. On average, the components of Ibovespa represent 70% of all the stock value traded.[2]
Its index number represents the present value of a portfolio begun on 2 January 1968, with a starting value of 100 and taking into account share price increases plus the reinvestment of all dividends, subscription rights that the constant's bonus stocks received.
History and adjustments
[edit]Prior to 2014, the index was composed by a theoretical portfolio with the stocks that accounted for 80% of the volume traded in the last 12 months and that were traded at least on 80% of the trading days. It was revised quarterly, in order to keep its representativeness of the volume traded and in average the components of Ibovespa represented 70% of all the stock value traded. On 11 September 2013, BM&FBOVESPA announced the changes to the Ibovespa methodology, which would be implemented in a two-phased approach by May 2014.
The principal changes to the index methodology included:[2]
- Weighting function – previously a liquidity-driven weighting, starting from January 2014, weighting is now based on market value attributable to a constituent’s free float, with a liquidity cap (Tradability Ratio) set at twice the hypothetical weight of the constituent
- The Tradability Ratio (Índice de Negociabilidade, or IN) is now calculated to take into account 1/3 of a component’s share of the overall number of trades and 2/3 of the component’s share of the overall value traded on the cash equity market;
- The Tradability Ratio cut-off threshold for a stock to qualify for inclusion in the index has been raised from 80% to 85%
- The 'active trading' requirement, as measured based on number of trading sessions, has been raised from 80% to 95%
- In flotations of issuers listed over the course of the two previous portfolio cycles, the new stocks are now accepted for early index membership
- Stocks that qualify as penny stocks are now ineligible for inclusion in the index
- Stocks which at any rebalancing classify by individual Tradability Ratio over a certain period, collectively account for over ninety percent (90%) of the sum total of such metric, are now removed from the index
- The criteria pursuant to which a constituent stock which is suspended from trading retains index membership or is removed from the index have been made clear
- A limit was introduced in terms of the maximum relative weight of a company’s total contribution to the index.
Adjustments
[edit]The index has been adjusted as follows, most of the adjustments occurred during the time Brazil experienced high rates of inflation during the 1980s and early 1990s:
- division by 100, on 3 October 1983
- division by 10, on 2 December 1985
- division by 10, on 29 August 1988
- division by 10, on 14 April 1989
- division by 10, on 12 January 1990
- division by 10, on 28 May 1991
- division by 10, on 21 January 1992
- division by 10, on 26 January 1993
- division by 10, on 27 August 1993
- division by 10, on 10 February 1994
- division by 10, on 3 March 1997
Record values
[edit]Type | Date | Value |
---|---|---|
Intraday (during the day) high | 7 June 2021 | 131,190.30 |
Closing high | 7 June 2021 | 130,776.27 |
Annual returns
[edit]The following table shows the annual development of the Índice Bovespa since 1998.[3]
Year | Closing level | Change in Index in Points |
Change in Index in % |
---|---|---|---|
1998 | 6,784 | ||
1999 | 17,092 | 10,308 | 151.95 |
2000 | 15,259 | −1,833 | −10.72 |
2001 | 13,578 | −1,681 | −11.02 |
2002 | 11,268 | −2,310 | −17.01 |
2003 | 22,236 | 10,968 | 97.34 |
2004 | 26,196 | 3,960 | 17.81 |
2005 | 33,456 | 7,260 | 27.71 |
2006 | 44,474 | 11,018 | 32.93 |
2007 | 63,886 | 19,412 | 43.65 |
2008 | 37,550 | −26,336 | −41.22 |
2009 | 68,588 | 31,038 | 82.66 |
2010 | 69,305 | 717 | 1.05 |
2011 | 56,754 | −12,551 | −18.11 |
2012 | 60,952 | 4,198 | 7.40 |
2013 | 51,507 | −9,445 | −15.50 |
2014 | 50,007 | −1,500 | −2.91 |
2015 | 43,350 | −6,657 | −13.31 |
2016 | 60,227 | 16,877 | 38.93 |
2017 | 76,402 | 16,175 | 26.86 |
2018 | 87,887 | 11,485 | 15.03 |
2019 | 115,645 | 27,758 | 31.58 |
2020 | 119,017 | 3,372 | 2.92 |
2021 | 104,822 | −14,195 | −11.93 |
2022 | 109,735 | 4,913 | 4.69 |
2023 | 134,185 | 24,450 | 22.28 |
For a list of the components of the index, check the article List of companies listed on Ibovespa.
See also
[edit]References
[edit]- ^ "The Complete List of Components of Brazil Bovespa Index". topforeignstocks.com. Retrieved 3 October 2020.
- ^ a b c "Bovespa Index (Ibovespa) -- See downloadable file "Methodology for the Bovespa index" at menu on right of page". B3 Stock Exchange. B3 S.A. – Brasil, Bolsa, Balcão. Retrieved 3 October 2020.
- ^ "BVSP Index (Brazil) Yearly Stock Returns". 1stock1.com. Retrieved 19 January 2020.