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Índice Bovespa

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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

Bovespa Index 1994–2019

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

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]

  1. 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
  2. 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;
  3. The Tradability Ratio cut-off threshold for a stock to qualify for inclusion in the index has been raised from 80% to 85%
  4. The 'active trading' requirement, as measured based on number of trading sessions, has been raised from 80% to 95%
  5. In flotations of issuers listed over the course of the two previous portfolio cycles, the new stocks are now accepted for early index membership
  6. Stocks that qualify as penny stocks are now ineligible for inclusion in the index
  7. 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
  8. 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
  9. A limit was introduced in terms of the maximum relative weight of a company’s total contribution to the index.

Adjustments

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:

  1. division by 100, on 3 October 1983
  2. division by 10, on 2 December 1985
  3. division by 10, on 29 August 1988
  4. division by 10, on 14 April 1989
  5. division by 10, on 12 January 1990
  6. division by 10, on 28 May 1991
  7. division by 10, on 21 January 1992
  8. division by 10, on 26 January 1993
  9. division by 10, on 27 August 1993
  10. division by 10, on 10 February 1994
  11. division by 10, on 3 March 1997

Record values

Type Date Value
Intraday (during the day) high 7 June 2021 131,190.30
Closing high 7 June 2021 130,776.27

Annual returns

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

References

  1. ^ "The Complete List of Components of Brazil Bovespa Index". topforeignstocks.com. Retrieved 3 October 2020.
  2. ^ 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.
  3. ^ "BVSP Index (Brazil) Yearly Stock Returns". 1stock1.com. Retrieved 19 January 2020.
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