How do you track the strength of an economy? In developing nations, the basic yardsticks include gross domestic product (GDP), purchasing power, capital reserves, currency strength, and creditworthiness. As an economy becomes more sophisticated, other instruments evolve, including the indexes of organized capital markets.
The U.S. Hispanic economy has been called "a nation within a nation" (see "Latinos Inc." by Arlene Davila, University of California Press, $22.50), yet other large Hispanic markets such as Mexico, Spain, and Argentina have their own equity markets and stock indexes. Why shouldn’t the U.S. Hispanic market have one as well?
In response to this situation, HispanTelligence®, the research unit of Hispanic Business Inc., has developed the Hispanic Business Stock Index (HBSI)SM. In the same way that other leading indexes track countries or industries, the HBSI provides a spot-check barometer of conditions for companies in the U.S. Hispanic market.
The HBSI includes publicly traded companies that are majority Hispanic-owned or whose main focus is the U.S. Hispanic market, regardless of the shareholders’ ethnicity. Only stocks traded in the United States on the New York Stock Exchange (NYSE), Nasdaq, the American Stock Exchange (AMEX), or over-the-counter (OTC) were considered for selection.
Thirteen companies, across a spectrum of sectors, meet the criteria (see table, "Hispanic Business Stock Index"). Total market capitalization of the HBSI companies was $15.72 billion as of December 2002, and total annual sales for 2002 amounted to $8.39 billion. The media sector has the most capital on the index and includes Univision, Hispanic Broadcasting, Entra-vision Communications, Spanish Broadcasting, and Radio Unica. Next comes the financial sector, with Popular Inc. (holding company for Banco Popular), International Bancshares, and Metrocorp.
Calculation of the HBSI follows a methodology based on weighted market capitalization, similar to the Standard & Poor’s 500 Index (S&P500). Market capitalization refers to how much the stock market values the company, or in other words, the price of the stock multiplied by the number of outstanding shares. On that basis, the three top companies on the HBSI – Univision, Popular Inc., and Hispanic Broadcasting – together form the clear bellwether of the Hispanic market, accounting for more than 74 percent of the index (see table, "HBSI Capitalization & Index Weight" below).
|HBSI Capitalization & Index Weight*|
|Market cap.||% of market cap.|
|Company name||($M)||(weight)||Cum. %|