New index to track global nuclear stocks

29 January 2008

A new index of 66 leading global nuclear companies has been created by a partnership of the World Nuclear Association (WNA) and S-Network LLC. Pending regulatory approval, financial products based on the WNA Nuclear Energy Index could be available by March.

 

The WNA Index is meant to provide a benchmark for the relative financial success of the nuclear industry. It is comprised of 66 globally traded companies, which either are 'materially influenced by industry development' or 'principally engaged' in nuclear energy because they generate 50% or more of their revenue from nuclear-related activity.

 

S-Network is a specialist index creator and has in the past brought indexes such as the Ardour Alternative Energy Index and the Janney Global Water Index to the financial markets. Its partnership with the WNA, called WNA Global Indexes LLC, will license the WNA Index to financial companies that may wish to use it as the basis for investment products.

 

The WNA Index is rule-driven. Its composition and weighting are determined by a complex set of rules that take into account such factors as market capitalization and proportion of activity that is nuclear-related. A non-financial rule specifies that companies engaged in handling fissile material other than natural uranium must be WNA members and thereby subscribers to the WNA Charter of Ethics.

 

Both S-Network and the WNA provide members and support staff for an index committee which also includes Zack Pate, chairman-emeritus of the World Association of Nuclear Operators (WANO).

 

Committee member Joseph LaCorte of S-Network said: "It is difficult to isolate and capture the economic opportunities embedded in the global growth of nuclear energy." However, through its broad base he considers that "the WNA Index comes as close as possible."

 

The index breaks down by the following industry sectors:

  • Reactor vendors: 15%; four companies
  • Construction: 15%; eight companies
  • Nuclear fuels: 20%; nine companies
  • Power generation: 25%; 15 companies
  • Technology, equipment and services: 25%; 30 companies

The 66 firms have a total market capitalization of $1248.36 billion. The value of the index is calculated in real time by Standard & Poors Custom Indexes.  The index's website details the rules by which the WNA Index is derived.

 

The WNA Index is expected to be used as the basis for exchange-traded funds (ETFs). It has already been offered for licence to financial institutions and the first WNA Index-based financial products could be offered before the end of March.

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