BEL 20 index definition
Index tracking the performance of the 20 largest stocks traded on Euronext Brussels
What is BEL 20 index?
The Bel 20 index was established in 1991. It consists of a maximum of 20 the largest and the most traded stocks listed on the Brussels Stock Exchange, also called the Euronext Brussels. BEL 20 provides insights into the performance of the stock exchange and of the Belgian economy. The index is structured as a free-float market capitalisation-weighted index.
Stocks included in the index represent highly liquid stocks with an adequate level of the trading volume. It serves as a reference for structured products, funds, ETFs as well as derivative instruments such as futures and options.
BEL 20 index meaning
Companies which are part of the Bel 20 index have different market capitalisation value. The company with the lowest market cap of €973m is Ontex Group NV supplier of disposable personal hygiene products. The company with the highest market cap of €134bn is Anheuser-Busch In Bev SA/NV operating in the brewing industry. At the beginning of the last quarter of 2019, BEL 20 index had a market capitalisation of €287.5bn with a free-float market capitalisation of €179.4bn.
One of the requirements for a company to be included in the index refers to the market cap. A company should have a free-float market capitalisation of at least 300,000 times the index price, while stocks already included in the index should have a market cap of at least 200,000 times the index price. BEL 20 index price in 2019 was in the range from 3,144 euros up to 3,868 euros.
BEL 20 index explained
The composition of BEL 20 is reviewed annually, but there is a possibility for quarterly swift entry or replacement. In accordance with the index rulebook, screening is performed for the stocks' free float velocity. The minimum velocity for new entrants is set at 35 per cent, while stocks included in the index should have a velocity of at least 25 per cent. The rule indicates the portion of shares which should be freely-floating and be available for trading on the market. It is calculated on a daily basis by dividing the number of stocks traded with the available number of shares.
In cases where more than 20 companies fulfill the listing requirements, the selection of companies for inclusion in the index is based on their rankings. A spin-off or a fast entry can cause more than 20 companies to be included in the index. In such a situation, the lowest ranking company will be excluded.