Revamped 30-stock STI will go live on Jan 10 - Dec 11, 2007 (ST)
The Straits Times / The Business Times News On SPH
Revamped 30-stock STI will go live on Jan 10Another 18 new indexes of the FTSE ST Index Series also set to debut on S'pore stock market.
By Alvin Foo
Dec 11, 2007
The Straits Times
MARK down Thursday, Jan 10, as the start of a new era for watchers of the Singapore stock market.
That is when the new-look, streamlined Straits Times Index (STI), comprising 30 blue-chip stocks instead of the current 47, will take centre stage.
It will replace the old benchmark the same day another 18 new indexes of the FTSE ST Index Series also go live on the Singapore market.
Singapore Press Holdings, the Singapore Exchange (SGX) and Britain's FTSE Group jointly announced the start date yesterday.
To ensure a seamless transition, the opening value of the revamped STI on Jan 10 will be the same as the closing value of the present index on Jan 9.
A test version of the new-look STI has been running on the FTSE Group's website since Oct 8, beginning from a trial value of 1,000 points to avoid confusion with the current index.
The test values of the new indexes, meanwhile, have been calculated since Oct 8, with all 18 beginning at 1,000. Their opening values on Jan 10 will be their closing trial values on Jan 9.
The new indexes include the FTSE ST Mid Cap Index - made up of the next 50 companies by full-market capitalisation - and the themed FTSE ST China Index, boasting 50 China plays.
Next month's revamp will see 21 current component stocks making way for four new entrants - aircraft maintenance firm SIA Engineering, agri-
business group Wilmar and two China-based firms, shipbuilder Yangzijiang and high-end real estate developer Yanlord.
The 30 stocks in the new STI were chosen according to the FTSE Group's international method. The method includes screening a share for adequate free float and measuring its daily average trading volume over the past 12 months.
The revamped 30-stock STI will have a recreated history dating back to Aug 31, 1999, to facilitate historical analysis. The FTSE Group will make this information available on Jan 11.
The current STI has dipped 7.05 per cent - from 3,822.62 points at the end of Oct 5 to 3,553.08 at yesterday's close.
During the same period, the trial value for the new STI declined from its starting value of 1,000 points to 936.55 - about 6.35 per cent.
'These two percentages are rather similar, as all the index heavyweights are in the revamped STI,' a dealer said.
Historical data shows a strong correlation between the old and new STI, with the new benchmark tracking the current one with 99 per cent accuracy over the past one, three and five years.
It also tracks the STI with an accuracy rate of 98 per cent over the last eight years.
Some market watchers have already started to monitor the test values of the new STI and are hoping to issue products, while others are adopting a wait-and-see approach.
Said Mr Ooi Lid Seng, Societe Generale's vice-president of structured products for Asia, excluding Japan: 'We welcome the changes and are looking forward to issuing more warrants on the new STI.'
Macquarie Securities' head of warrants, Mr Barnaby Matthews, said: 'We hope that the SGX and FTSE will work towards the development of a liquid STI futures market... From this foundation, we would hope to list STI warrants in the future.'
'We would require a liquid futures market in order to be able to maintain efficient markets in the warrants,' he added