SPH, SGX And FTSE To Develop New Indices For Singapore Stock Market

Singapore Press Holdings (SPH), Singapore Exchange (SGX) and FTSE Group today signed a Cooperation Agreement to develop a new set of indices for Singapore. This comprises a revamped Straits Times Index (STI) as the Singapore stock market's main benchmark and a family of 18 new indices called the FTSE ST indices that will complement the STI.

The aim of the collaboration is to create a comprehensive suite of indices* that will better reflect the performance of various sectors of the Singapore stock market and meet the needs of both retail and institutional investors globally.
(* Please refer to Appendix 1 for full list of indices)

The STI, which has been synonymous with the Singapore stock market for the past 40 years, will be revamped with the aim of ensuring that it continues to be the market’s key barometer for both local and international investors. There will be no change to its name or its numerical values.

The STI will undergo two main changes:

The number of constituent stocks will be reduced from 50 to 30. This will make the STI a highly liquid index. The reduction in constituent stocks will not significantly alter the representative ness of the index, given that it is value-weighted. In fact, the last 20 stocks of the current STI represent only about 10 per cent of the index by market capitalisation.
The STI will be calculated by FTSE according to its internationally recognised methodology for liquidity criteria and free-float adjustment. The index's constituents will also be reviewed by the three parties at regular intervals.

The new indices, by tracking the different sectors of the Singapore market, will help investors make better-informed investment decisions. The new indices will adopt FTSE’s international methodology and will be based on the International Classification Benchmark (ICB), the globally renowned classification system. The use of the ICB will facilitate cross-border analysis and comparisons.

Following the signing of the Cooperation Agreement, the three parties will commence the detailed work to construct the various indices. It is the intention of the parties to launch the indices by the end of the year. Adequate advance notice of the detailed STI changes and the new indices will be given to market participants.

Mr Alan Chan, Chief Executive Officer of SPH, said: "We are pleased that our partnership with SGX and FTSE will secure the position of the Straits Times Index as the market's main benchmark index and also will create a wider range of investable opportunities in the Singapore market.”

Mr Hsieh Fu Hua, Chief Executive Officer of SGX, said, “The introduction of Singapore indices using globally recognised and accepted methodology will ensure that we fulfill the investment and benchmarking needs of international investors. This will also facilitate the creation of index-linked products thereby offering greater investment options in our marketplace.”

Commenting on the collaboration, Mr Donald Keith, Deputy Chief Executive of FTSE Group, said: “FTSE is proud to be selected as index partner by SGX and SPH and to collaborate with both organisations to create a new index family for the Singapore market. Domestic and international investors recognise and understand the FTSE hallmark of design excellence. We expect the series will be used as the basis of new investment products.”

Please refer to the web sites of FTSE www.ftse.com/ftse_st_index_series and SPH www.straitstimes.com/stindex for more details of the new set of FTSE ST indices.

Appendix 1

The revamped Straits Times Index - comprising the top 30 mainboard listed companies selected by full market capitalization. The STI will be complemented by a new family of 18 FTSE ST indices.

FTSE ST Benchmark Indices

FTSE ST Mid Cap Index - comprising the next 50 main board listed companies by full market capitalisation;
FTSE ST Small Cap Index - comprising the remaining companies within the top 98 per cent by full market capitalisation of the main board universe;
FTSE ST All Share Index - comprising all companies within the top 98 per cent by full market capitalisation of the main board universe (i.e. large cap, mid cap and small cap indices combined);
FTSE ST Fledgling Index - All companies that are too small to be included within the FTSE ST All Share Index.

Sector Indices

Companies within the FTSE ST All Share Index will be classified by:

FTSE ST Oil and Gas Sector Index
FTSE ST Basic Materials Sector Index
FTSE ST Industrials Sector Index
FTSE ST Consumer Goods Sector Index
FTSE ST Healthcare Sector Index
FTSE ST Consumer Services Sector Index
FTSE ST Telecommunications Sector Index
FTSE ST Utilities Index
FTSE ST Financials Sector Index
FTSE ST Technology Sector index
FTSE ST Real Estate Index
FTSE ST Real Estate Holding and Development
FTSE ST Real Estate Investment Trusts

Theme Index

FTSE ST China Index