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Axing From Global Dow Highlights Shaky Footing of Citigroup and General Motors

30 March 2009 - News - Editor

Although the scheduled annual review of the Global Dow (GDOW) components is only due to take place in September, the extraordinary worldwide market conditions currently being experienced prompted a review of the 150 companies endorsed by the recently established market index. The result of the early review saw the ousting of General Motors and Citigroup – two companies that have been under the microscope for some time now. This has sparked speculation as to whether these two high-profile companies will suffer the same fate on the Dow Jones Industrial Average which monitors 30 top U.S. stock market listed companies, all of which are included in the GDOW.

Recognizing that the world is fast consolidating as a global village, with economies becoming more interdependent and closely linked, the Global Dow was launched on 11 November 2008 to monitor both emerging and developed markets, as well as to include emerging sectors, like alternative energy. Stocks listed in the Global Dow were selected by The Wall Street Journal’s senior editors together with senior editors from the Dow Jones Newswire.

The Global Dow differs from the Dow Jones Industrial Average in a number of ways: the GDOW monitors 150 stocks rather than 30; its components are weighted equally, with price movements not being influenced by the size of the stocks; as the name suggests it tracks blue chip companies on a global scale rather than only U.S. companies; and in addition to assessing companies for size and reputation, the Global Dow takes into account each components’ potential. All Dow Jones Industrial Average components are included in the Global Dow components. Listed in order from highest to lowest, the GDOW country allocations are: USA, Japan, Great Britain, France, Germany, Switzerland, China, India, Spain, Hong Kong, Brazil, Canada, South Korea, Australia, Italy, Mexico, Taiwan, Portugal, Finland, Sweden, Russia, Greece, Norway, Denmark and Netherlands.

In addition to General Motors and Citigroup, other deletions from the Global Dow include the National Bank of Greece S.A., the Royal Bank of Scotland Group PLC, AXA S.A., Cemex, Deutsche Post AG, Gamesa Corporacion Tecnologica S.A. and ING Groep N.V. Additions to the Global Dow include Bridgestone Corp., Canon Inc., Medco Health Solotions Inc., Esprit Holdings Ltd., CLP Holdings Ltd., Amen Inc. and NASDAQ OMX Group Inc. The changes will come into effect before trade opens on 1 April 2009.

 


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