S&P Indices and the Colombo Stock Exchange (CSE) have announced the launch of the S&P Sri Lanka 20 index. The index is designed to be representative of the Sri Lankan equity market while being efficient to replicate via index funds and ETFs, say the promoters.

The CSE currently calculates two stock market benchmarks, the All Share price index (ASPI), dating from 1985, and the Milanka price index.

The S&P Sri Lanka 20 index will include the largest 20 stocks listed on the CSE, subject to minimum size, liquidity and financial viability thresholds.  The constituents are weighted by float-adjusted market capitalisation, subject to a single stock cap of 15%.

Sri Lankan shares have been on the slide in recent months, with the ASPI index dropping by 30% from a high recorded in August 2011. The index rose outscored all other equity markets in 2010, however, registering a 96% gain.

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