The announcement was made at the 2006 Milken Institute Global Conference, an annual event in Los Angeles that brings together 2,500 of the world′s top executives, money managers and public policy makers. The eight Xinhua Finance/Milken Institute China Indicators will provide investors with a set of standardized, international measurements to gauge the performance of China′s markets and companies participating in those markets.
The new indicators are the Chinese Banking Sector Indicator, the Renminbi Indicator, the Chinese Initial Public Offering Indicator, the Chinese Market-Adjusted Debt Indicator, the Chinese Mergers and Acquisitions Indicator, the Chinese Privatization and Joint Venture Indicator, the Chinese Corporate Governance Indicator and the Trade Openness Indicator.
These indicators will be updated quarterly, except for the Chinese Banking Sector and Chinese Corporate Governance indicators, which will be updated twice a year, and the Renminbi Indicator, which will be updated monthly. For a full description of each indicator, please refer to the table below.
Xinhua Finance Chief Executive Fredy Bush said the partnership between Xinhua Finance and the Milken Institute is aimed at giving investors new, different and more insightful ways of looking at the China markets.
"No one has created such indicators before for China," Bush said. "They will provide greater transparency to the China market than has ever been available before. With Xinhua Finance′s China expertise and the Milken Institute′s financial technology and analytical depth in this area, we will be able to provide deeper and more useful ways of looking at the China market."
The new indicators are relevant given the high level of attention the China markets now attract, Bush said. "The global capital markets now recognize the importance of China′s markets more than ever, and as interest in China grows, the need for accurate and transparent economic analysis becomes more acute. We are pleased to partner in this pioneering initiative with the Milken Institute, which is uniquely qualified and experienced in forward-thinking financial innovations."
Milken Institute President and CEO Michael L. Klowden agreed that the indicators provide an opportunity to increase transparency in China′s markets.
"We are delighted to be able to partner with Xinhua Finance to provide these important new tools for evaluating China′s economy," Klowden said. "With our recent work helping reform China′s banking system and introduce debt markets, combined with our extensive capital-markets research, these indicators will provide valuable new insights into China′s financial markets."
Xinhua Finance and the Milken Institute expect significant demand for these new China indicators as interest and investment in China continues to grow.
List of Xinhua Finance/Milken Institute Indicators
1. Chinese Banking Sector Indicator
The indicator is an annual (or semi-annual) series that tracks the strength, safety and soundness of the Chinese banking system. The indicator will combine measurements of Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to risks (CAMELS) into a single indicator. The CAMELS will be modified further taking into account China′s macroeconomic environment.
2. Renminbi Indicator
This indicator will measure the pressure on the Renminbi to appreciate relative to a reference currency. The indicator is calculated on a monthly basis using foreign exchange reserves and imports. Adjustments will be made to reflect the sensitivity of changes in exchange reserves to changes in exchange rates.
3. Chinese Initial Public Offering (IPO) Indicator
Updated quarterly, the Chinese IPO Indicator will track the performance of IPOs as well as the IPO intensity of the Chinese equity market. The indicator will be a weighted average of data points that will include the performance of past IPOs, the change in exchange listings and the normalized number of new IPOs. Sub-indicators will be calculated for the two domestic Chinese markets, A and B equities, and for foreign markets (e.g. Hong Kong, New York, Singapore and Tokyo).
4. Chinese Market Adjusted Debt (MAD) Indicator
Updated quarterly, the Chinese MAD Indicator will provide important data on the leverage and valuation of publicly listed Chinese firms. Primary data used will include debt and market capitalization of the largest Chinese firms. Sub-indicators will be calculated for various sectors.
5. Chinese Mergers and Acquisitions (M&A) Indicator
Updated quarterly, the Chinese M&A Indicator will track the intensity of M&A activity in China. The indicator will be calculated as a weighted average of M&A activity both cross-border and within the country. Weightings for these data will conceivably include some or all of the following: revenues, market capitalization and assets of targets or acquirers.
6. Chinese Privatization and Joint Venture Indicator
Updated quarterly, the Chinese Privatization and Joint Venture Indicator will provide important data on the relative performance of the private and state-owned sectors of the Chinese economy. The indicator will be calculated as a weighted average of data that will include the performance (e.g. profitability and employment) of the private and public sectors, encompassing privatization activity and joint ventures.
7. Chinese Corporate Governance Indicator
This measures the degree to which Chinese firms conform to broad standards of good corporate governance.
8. Trade Openness Indicator
This quarterly time series indicator tracks progress toward WTO compliance, starting from 2001. It will gauge the development in the financial and trade sectors with respect to the commitments made as a condition of becoming a member of the WTO. The indicator will be accompanied by descriptive information regarding compliance.
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About Xinhua Finance Limited
Xinhua Finance Limited is China′s unchallenged leader in financial information and media, and is listed on the Mothers board of the Tokyo Stock Exchange (symbol: 9399) (OTC ADRs: XHFNY). Bridging China′s financial markets and the world, Xinhua Finance serves financial institutions, corporations and re-distributors through four focused and complementary service lines: Indices, Ratings, Financial News and Investor Relations. Founded in November 1999, the Company is headquartered in Shanghai with 21 news bureaus and offices in 18 locations across Asia, Australia, North America and Europe. For more information, please visit www.xinhuafinance.com.