SGX: STI & FTSE ST Index Series Rebalancing In March

The next quarterly review of the FTSE ST Index Series which includes the Straits Times Index (STI) is scheduled for 7 March. The review is based on market data from the last trading day of February. Changes resulting from the review is scheduled to be effective after the close of the respective markets on 15 March (the third Friday of the month).

Quarterly reviews in March and September are more extensive than the reviews of June and December. The FTSE ST Advisory Committee also makes liquidity reviews in addition reviewing fledging constituents in March and September.

The FTSE ST Index Series is adjusted for free float and all constituents of the FTSE ST Index Series have to conform to free float rules (in addition eligibility and liquidity rules).

Free float methodology enhancements

Commencing with this March rebalancing, a free float methodology change will become effective for the FTSE ST Index Series. Previously, relevant free float bands were used in the determination of constituent weightings where the free float of a company has been categorised by “bands” i.e. a company’s free float at more than 30% but less than 40% would be banded at 40%.

Effective 18 March, actual free float (rounded up to the nearest 1%) will be used, unless the actual free float is within a 3% buffer of the constituent’s current banded float. For example, if a company’s current free float band is 50%, and its actual free float is 51.5%, the float will be kept at 50% as it is within the 3% buffer. Thereafter, FTSE Group will only change a company’s actual free float following corporate event or at quarterly reviews if its actual free float moves +/-3%.

FTSE originally announced these changes in July last year and have a transition process to minimise unnecessary turnover with the new change. Please also note that changes to floats between reviews will be made in response to corporate events, secondary offerings or significant changes to shares in issue. For more information please see the Index Review page here.

STI Reserve List

The STI reserve list is currently made up of five securities, Hutchison Port Holdings Trust, Keppel Land, Ascendas Real Estate Investment Trust, CapitaCommercial Trust and UOL Group. Note this list includes two Real Estate Holding and Development companies, two Real Estate Investment Trusts (REITs) and Hutchinson Port Holdings Trust (HPHT). Dual currency functionality enables HPHT Trust to be traded in both USD and SGD.

The recent performance of these five reserve stocks is detailed below. Twelve month performances have varied from -1.8% for CapitaCommercial REIT to +12.2% for Ascendas REIT. Current full market capitalisation of the reserve list varies from US$7.36 billion for HPHT to $4.62 billion for CapitaCommercial REIT.