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SGX And CAI Launch Index To Capture Long Term Aviation And Travel-Related Growth As Borders Reopen

Date 25/11/2021

  • This marks the first-of-its-kind collaboration between an index provider and airport group, where deep knowledge of the aviation industry is translated into an index format

Singapore Exchange (SGX) and Changi Airports International (CAI) today jointly launched the iEdge-GateEq Aviation and Travel Index which aims to capture global aviation and travel-related long term growth, as borders reopen and travel restrictions ease.

Developed by SGX as part of the SGX iEdge product suite and in collaboration with GateEq, a strategic initiative of CAI which is the consultancy and investment arm of Changi Airport Group, the market capitalisation-weighted index covers the top 50 listed companies worldwide with revenue derived from the six sectors defined by GateEq, namely Airport Infrastructure and Services, Airlines, Original Equipment Manufacturer (OEM) and System Providers, Air Freight and Logistics, Travel and Booking Services, and Hospitality.

This index is constructed to be tradable, with efficient liquidity and replicability. SGX will review the index constituents quarterly, using the index methodology to screen a universe of stocks researched by GateEq. 

The advent of COVID-19 has led to an unprecedented impact on the aviation industry as global passenger volume plummeted. However, the International Air Transport Association (IATA) has forecasted a recovery where global passenger numbers are expected to surpass pre-COVID-19 levels by 2024, depending on countries’ border reopening and quarantine mandates. Nevertheless, global vaccination efforts and the recent reopening of key markets like the U.S. and Europe, as well as other regional markets like Australia, Argentina, Thailand and Singapore should boost confidence for air travel recovery and its growth thereafter.

Based on the iEdge-GateEq Aviation and Travel Index, travel and aviation stocks displayed high volatility since March 2020 as countries were grappling with border closures and reopening. The index has since reached pre-COVID-19 level in October 2021, driven by a rally in hospitality, travel and booking related stocks, while airlines and air freight stocks remain as laggards.

Ng Kin Yee, Managing Director and Head of Data, Connectivity and Indices, SGX, said, “We are delighted to partner CAI on this aviation and travel index launch. As borders reopen and travel restrictions ease, the aviation and travel sector is one that is keenly watched by investors seeking to capture post-pandemic growth. While growth across the industry may be uneven, we hope that this index will serve as a yardstick and source of insight for investors and the wider industry, and we certainly look forward to this ongoing partnership with CAI.” 

Eugene Gan, CEO of CAI, said, “Notwithstanding CAI having established a global footprint covering multiple airports across different regions, we believe this is the first occasion in the world where an airport group is working with a leading index market provider to provide such a unique solution for the financial market. We are excited to work with SGX in this new partnership and to launch the index at this opportune moment as borders reopen.”

For details on the index methodology, please visit: https://www.sgx.com/indices/products/iegatenr