Bringing The World Into Focus: A Guide to MSCI Indexes
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Bringing the World Into Focus: A Guide to MSCI Indexes

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The following content is sponsored by MSCI

MSCI Indexes

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Bringing the World Into Focus: A Guide to MSCI Indexes

Economic development around the world has led investors to consider broadening their investment exposures.

But with nearly 30,000 equity securities available globally, the universe is far too large for an investor to filter by themselves.

In this sponsored infographic from MSCI, we explain their index creation process that allows them to map and categorize the stock market.

Defining the Global Universe

Although a majority of global market capitalization is located in the U.S., overseas markets (both developed and emerging) are home to thousands of publicly-listed companies.

Thus, the first step that MSCI takes is identifying eligible securities from public stock markets. Mutual funds, ETFs, and equity derivatives are screened out. This leaves ordinary and preferred shares, share equivalents, and real estate investment trusts (REITs).

Share equivalents are securities that can be converted into company shares. This includes securities such as American depository receipts (ADRs), which are certificates issued by U.S. banks that represent a specified number of a foreign company’s shares. Meanwhile, REITs are companies that own and operate income-producing real estate such as office buildings.

Applying Investability Screens

A stock index is not useful if its underlying securities are not widely accessible.

To create an investable representation of the global market, MSCI screens its universe of eligible securities according to three requirements.

1. Shares must be investable

MSCI analyzes two different size metrics—free-float market cap and full market cap—to make an assessment of the share capital available for investors.

Free-float market cap refers the value of shares readily available in public markets, while full market cap is equal to the former, plus the value of shares provided through a company’s equity issuance plans. For a company to be included in an MSCI index, it must meet the minimum target for both of these metrics.

2. Shares must be accessible to international investors

To ensure that investors from all regions can access its indexes, MSCI sets a minimum threshold for a security’s foreign inclusion factor (FIF).

The FIF of a security is the proportion of shares outstanding that is publicly available for purchase by international investors.

3. Shares must be sufficiently tradeable

The underlying securities of an index must have sufficient liquidity so that the index can be used as a benchmark for ETFs and other products.

MSCI uses two metrics to determine how liquid a stock is, with the first being 3 month frequency of trading (FOT). This metric compares the number of days a stock traded during a 3 month period, with the maximum number of trading days in that period.

The second metric is the annual traded value ratio (ATVR), which measures the percentage of total share value that is traded every year. This enables MSCI to identify stocks with stable long- and short-term liquidity.

Classifying Companies

At this stage, MSCI has an investable representation of the global market.

The next step is to classify every company into three non-overlapping categories, enabling MSCI to create indexes that target specific countries, regions, or sectors. Indexes can also focus on larger or smaller companies.

CategoryDetail
CountryA company and its securities can only be classified in one country.
MSCI considers criteria such as:
  • Country of incorporation
  • Geographic distribution of the company's shareholder base
  • Location of primary listing
  • Company history
SectorUsing the Global Industry Classification Standard (GICS), a company
is assigned to the sector that best describes its business activities. GICS consists of:
  • 11 sectors
  • 24 industry groups
  • 69 industries
  • 158 sub-industries
SizeA company can only be assigned to one size segment. These are:
  • Large cap
  • Mid cap
  • Small cap
  • Micro cap

Over 50 Years of Index Development

The world’s equity universe is constantly changing, opening up new opportunities within industries, countries, and even entire regions.

While some investors aim to support the fight against climate change, others look to take advantage of long-term structural trends. Regardless of the objective, investors need a starting point from which they can build a relevant portfolio.

MSCI indexes seek to provide extensive coverage of the world’s opportunities, giving investors the tools they need to shape and refine their investment allocations.

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Value in the Ground: Cartier Resources’ Chimo Mine Project

Cartier Resources (TSX-V: ECR) is advancing the Chimo Mine Gold Project in the Abitibi region of Quebec, showing its potential with past producing mines.

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Value in the Ground: Cartier Resources’ Chimo Mine Project

The sponsor of this graphic, Cartier Resources (TSX-V: ECR), has instigated an exploration strategy to increase ounces in the ground at the historic Chimo Mine in the heart of the Abitibi that continues to deliver increasing resources.

Cartier is deploying the strategy in the right region, with the right backers to find gold faster at a lower cost. This graphic provides an overview of the project’s massive potential.

Proven Endowment: The Abitibi Greenstone Belt

There are many prolific past-producing gold districts in Canada, but the Abitibi is one of the largest and well understood gold-bearing regions with readily available exploration infrastructure.

This region extends from Wawa in Northwestern Ontario to the East near Val-d’Or, Québec—a landscape that hosts some of the most productive gold mines in Canada.

Cartier’s Chimo Mine project located in the historic Abitibi Greenstone belt of Québec builds on a legacy of gold production with a project ready for investors.

Tried and Tested Exploration Strategy

The best place to find gold is where companies discovered and mined it before. Between 1964 and 1997, three companies produced 379,012 ounces of gold at the Chimo Mine.

This type of strategy is known as brownfield exploration. Brownfield exploration looks for gold in areas known to host gold mineralization. It offers investors less risk, reducing the amount of uncertainties a company faces.

Ounces in the Ground: Growing a Gold Resource

Cartier delivered its first-ever resource estimate within three years and proved the value at Chimo. In November 2019, the company published its first mineral resource estimate of the central gold corridor on the Chimo Mine property.

It reported Indicated resources of 481,280 ounces of gold and Inferred resources of 417,250 ounces of gold. This resource estimate came from only one-third of the property.

This was just the beginning for Cartier Resources and the Chimo Mine.

In 2021, Cartier upgraded its resource estimate with drilling from its North and South corridor. The company increased the indicated resources to 684,000 oz Au (6,616,000 tonnes at 3.21 g/t Au) and the inferred resources to 1,358,000 oz Au (15,240,000 tonnes at 2.77 g/t). This gives the property over 2 million ounces of gold in the heart of the Abitibi.

Why Invest in Chimo?

Cartier Resources has consistently applied an exploration strategy to develop and increase the known gold resources at the Chimo gold mine.

It built on the foundations of a proven past producer and continued exploration success to discover more gold. In the heart of a safe and established mining jurisdiction, Cartier has put the Chimo Mine back on the Abitibi gold map.

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Visualizing the Rise of Cryptocurrency Transactions

As cryptocurrency transactions rise, merchants are looking to position themselves to take advantage of this new wave of crypto spenders.

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daily crypto transactions

Visualizing the Rise of Cryptocurrency Transactions

After Bitcoin and cryptocurrency’s wild bull run in late 2020 and early 2021, many holders are now using cryptocurrencies for their intended purpose: payments.

Every day, approximately $12 billion are transferred across the Bitcoin, Ethereum, and Litecoin blockchains, with millions of people using cryptocurrency for payments daily.

This graphic sponsored by CoinPayments looks at the rising transactions of the Bitcoin, Ethereum, and Litecoin networks.

Cryptocurrency Transactions are Rising in Value and Number

While prices are often the focus when crypto is in the spotlight, transaction counts show how much a network is being used as a medium of exchange. In just over five years, daily transactions across the Bitcoin, Ethereum, and Litecoin networks increased sixfold, from just 250,000 to more than 1.5 million transactions a day.

In mid-2017, Ethereum overtook Bitcoin in daily transactions as ETH was necessary to participate in ICOs (initial coin offerings), which fueled much of the speculation in the 2017 price run. With Ethereum still hosting thousands of ERC-20 and ERC-721 tokens on its blockchain today, its transaction counts have grown to be much higher compared to Bitcoin and Litecoin’s.

Along with crypto’s rising transaction numbers, the average USD value per transaction has increased by a minimum of 4x over the past five years.

YearAverage Value per Bitcoin TransactionAverage Value per Ethereum TransactionAverage Value per Litecoin Transaction
2016$2,426$588$1,357
2021$32,943$19,139$5,458

Source: Coin Metric
2021 figures as of July 13th, 2021

Crypto Spenders are Searching for Merchants

As transaction counts and values rise, merchants play a vital part in pushing forward the adoption of digital currencies for payments.

Many cryptocurrency users consider merchant adoption as a key barometer of success for crypto adoption. While companies like AT&T, Namecheap, and Overstock already accept crypto payments, there are still many businesses around the world which don’t offer cryptocurrency as a method of payment.

In a survey of over 8,000 U.S. consumers, 66.7% of crypto owners and 54.2% of non-owners said that not enough merchants accept cryptocurrency. Along with this, 47% of crypto owners said they seek out merchants that accept crypto for purchases, indicating clear demand for more crypto-accepting businesses.

How Can Merchants Make the Most of the Crypto Boom?

As the world embraces crypto, merchants need the in-store and online tools to be part of this next wave of commerce. Accepting crypto opens merchants up to an untapped audience of new consumers, eager to spend their crypto.

CoinPayments makes it easy to start accepting crypto payments at online checkout and with POS systems, with features like auto-coin conversion and over 2,000 coins supported.

Find out more about how the crypto market is growing, adapting to consumer needs, and the opportunity it presents to merchants around the world.

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