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The BITA Green Energy Giants Index (BNGEGI) is the definitive benchmark stock index for clean energy companies. The index is designed to track the returns realised by companies who have direct revenue exposure to the production of clean energy or technologies that help generate clean energy. Clean energy sources include solar, wind, geothermal and hydro-electrical. BNGEGI was launched on the 27th of November 2020 by BITA, a reputable German-based FinTech company, which also maintains the index.
Green Energy Giants Index launched with a value of 1000 at inception. The index benefitted from positive regulatory anticipation around the period of inception, and this inspired a drift upwards to an all-time high of circa 1500 by early February 2021. The rally, however, paved the way for a retracement that saw the index settle at levels above 1100 as of April 2021.
Index Composition and Calculation
BNGEGI is a free-float market-capitalisation-weighted index calculated using the standard Laspeyres formula. A free float index considers only outstanding shares held by the public, and it is market capitalisation that dictates the inclusion of any constituent. A unique variable divisor is also applied to ensure that the index maintains continuity across corporate actions such as mergers, acquisitions or takeovers, spin-offs, as well as dividend policies. The index has a weight cap of 9% per constituent, and any excess weight is proportionally distributed among all other constituents until that condition is achieved. This process is done iteratively. For accuracy purposes, the index is calculated up to 13 decimal places, but for storage, publishing, and dissemination purposes, it is rounded off to 2 decimal places.
Green Energy Giants Index has no current limit on the number of constituents. However, a company must meet the following conditions to be considered for inclusion:
- It must be listed and traded on a recognised stock exchange in the US or Canada, having met all the strict conditions.
- It must have a minimum market capitalisation of $100 million.
- It must have a minimum average daily traded value (ADTV) of $500,000 over the last 3 months.
- It must derive at least 50% of its revenues or earnings from the development, production, and commercialisation of green energy services or technologies.
The BNGEGI index is rebalanced quarterly on the third Friday of March, June, September, and December to ensure that its value accurately reflects the equity performance of the lucrative clean energy niche. The Determination Date for ordinary adjustments occurs five business days before the rebalancing month. Other extraordinary adjustments are captured by the index at the end of the business day when the extraordinary event takes place or when the BITA index committee deems it appropriate.
Here are the current top 10 constituents of the BNGEGI index as of April 2021:
Brookfield Renewable Partners
Ballard Power Systems
Factors Influencing the Price of BNGEGI
Green energy is, without doubt, the future of energy investment, particularly now as more companies commit to becoming more and more environmentally aware. The green energy revolution that has long been all talk is now fast becoming all action. Experiences of extreme weather have shaped global policy on the environment in recent years and have consequently inspired changing consumer behaviour as well as the development of cheaper and more practical clean energy technologies.
Regulation and legislation have always been a major fundamental of the clean energy niche. Particularly, in the US, the Biden administration has committed to rolling out a $2 trillion, 8-year plan that seeks to accelerate the transition to renewable energy in the country. This is in line with the goal of ensuring that the US is 100% carbon-neutral by 2035. This is a major reason why clean energy stocks rallied towards the end of 2020 when Biden won the presidential election in the US.
Although clean energy companies seek to eventually replace fossil fuels, their stocks are vulnerable to changes in the prices of energy commodities, such as oil. When oil prices rise, oil companies can experience increased investor demand because of the underlying higher margins expected. This can lead to capital flight from clean energy stocks. Conversely, lower oil prices may lead to more investment demand on clean energy stocks. In addition to the above, the price of BNGEGI can be determined by factors such as interest rates, general investor sentiment, and significant price changes of major constituent stock(s).
Why Trade Green Energy Giants Index CFDs
BNGEGI constituents are some of the biggest companies in the green energy niche. This guarantees a liquid index that can be traded with transparent prices and low trading costs.
- Stable Price Action.
BNGEGI has stable, predictable price action at practically all times, except in extreme crisis situations.
- Vast News Coverage.
BNGEGI is the benchmark stock market index for clean energy companies in North America. This guarantees massive media coverage, which can help investors make more informed trading decisions.
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