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IBEX 35

The IBEX 35 (an acronym of Iberia Index) is the benchmark stock market index of the Bolsa de Madrid, Spain's principal stock exchange. Initiated in 1992, the index is administered and calculated by Sociedad de Bolsas, a subsidiary of Bolsas y Mercados Españoles (BME), the company which runs Spain's securities markets (including the Bolsa de Madrid). It comprises the 35 most liquid Spanish stocks traded in the Madrid Stock Exchange General Index, which are reviewed twice annually. Trading on options and futures contracts on the IBEX 35 is provided by MEFF (Mercado Español de Futuros Financieros), another subsidiary of BME.

History

The IBEX 35 was inaugurated on 14 January 1992, although there are calculated values for the index back to 29 December 1989, where the base value of 3,000 points lies.

Since the turn of the century, the index has outperformed many of its Western peers, driven by relatively strong domestic economic growth which has particularly helped construction and real estate stocks. Consequently, while the record highs to date of the FTSE 100, CAC 40 and AEX, for example, were set during the dot-com bubble in 1999 and 2000, the IBEX 35's all-time maximum of 15,945.70 was reached on 8 November, 2007.

The week of the January 2008 stock market downturn was characterised by extreme volatility in the markets, and saw both the biggest one day percentage fall and rise in the IBEX 35's history. The index closed 7.5% down on 21 January 2008, the second biggest fall in the Spanish equity market since 1987, and rose a record 6.95% three days later.

Rules

Selection

The composition of the IBEX 35 is reviewed twice per year (in June and December) by the so-called Technical Advisory Committee, which consists of "representatives of the stock exchanges and derivatives markets, as well as... renowned experts from the academic and financial fields". If any changes are made, they are effected on the first trading day of July or January. In general, at each review, the 35 companies with the highest trading volume in Euros over the previous six months are chosen for inclusion in the index, provided that the average free float market cap of the stock is at least 0.3% of the total market cap of the index. Any candidate stock must also have either been traded on at least a third of all trading days in the previous six months, or rank in the top twenty overall in market cap (thus allowing large recently IPO'ed companies to be included).

Weighting

The IBEX 35 is a market value-weighted index. The market cap used to calculate the weighting of each constituent is multiplied by a free float factor (ranging from 0.1 to 1) depending on the fraction of shares not subject to block ownership. Any company with 50% or more of its shares considered free float is given a free float factor of 1. Unlike many other European benchmark indices, the weightings of companies in the IBEX 35 are not capped.

Calculation

The index value (given here as I) of the IBEX 35 index is calculated using the following formula:

$I(t) = I(t-1)timesfrac{sum_{i=1}^{35} Cap_{i}(t),}{[,sum_{i=1}^{35} Cap_{i}(t-1),pm J,],}$

with t the moment of calculation; Cap the free float market cap of a specific listing and J a coefficient used to adjust the index on the back of capital increases or other corporate actions so as to ensure continuity. The formula can be adjusted to accommodate changes in index structure, such as the temporary suspension of companies pending news.

Components

As of the bi-annual review effective 1 July, 2008, where Sogecable was replaced with Obrascón Huarte Lain.

Company	IGBM sector	Index weighting (%)¹
Abengoa	engineering and others	0.35
Abertis	car parks and motorways	1.96
Acciona	construction	1.86
Acerinox	minerals, metals and transformation	0.92
ACS	construction	2.19
Banco Popular	banks	2.59
Banco Sabadell	banks	1.59
Banco Santander	banks	17.70
Banesto	banks	0.32
Bankinter	banks	0.71
BBVA	banks	11.06
BME	investment services	0.48
Cintra	car parks and motorways	0.56
Criteria CaixaCorp	portfolio and holding	1.24
Enagás	electricity and gas	1.04
Endesa	electricity and gas	0.40
FCC	construction	0.72
Ferrovial	construction	1.07
Gamesa	capital goods	1.84
Gas Natural	electricity and gas	2.41
Grifols	pharmacy products	1.05
Iberdrola	electricity and gas	10.31
Iberdrola Renovables	renewable energy	1.01
Iberia	transport and distribution	0.35
Inditex	textiles, clothing and shoes	2.65
Indra	electronics and software	0.66
Mapfre	insurance	0.67
Obrascón Huarte Lain	construction	0.37
Red Eléctrica	electricity and gas	1.36
Repsol YPF	petrol	7.41
Sacyr Vallehermoso	construction	0.54
Técnicas Reunidas	engineering and others	0.58
Telecinco	communication and publicity	0.29
Telefónica	telecommunications and others	19.55
Unión Fenosa	electricity and gas	2.19