September 25, 2013
By Ben MillerAs the value of Eike Batista’s beleaguered oil company OGX plummeted on Brazil’s stock exchange in the summer months of 2013, a curious thing happened.
The firm’s market cap had all but disappeared — by September the stock had fallen by more than 90% since the start of the year — yet its relative importance to Brazil’s benchmark stock index grew.
Trading volume determined equity weightings — and OGX, despite its withering value, was one of the most heavily traded companies on the index.
Now, however, BM&FBovespa is changing the way it calculates the index. It is the first time the methodology has been altered since it was created in 1968.
But its travails precede OGX’s de
Brazil will need to rebalance more than just its stock index to improve the lot of its companies. Yet relative to other countries, its markets might now be set for a second chance