New, slimmer ST Index of 30 stocks revealed - Oct 06, 2007 (ST)
The Straits Times / The Business Times News On SPH
New, slimmer ST Index of 30 stocks revealed18 new sub-indices set up; Cosco and SPH remains in revamped index.
By Alvin Foo
Oct 06, 2007
The Straits Times
DETAILS of a radical revamp of the Straits Times Index (STI), the share market barometer that reflects the ups and downs of Singapore's bourse, have been revealed.
|Counters that made the cut|
2. CapitaMall Trust
3. City Developments
4. Cosco Corp
5. DBS Group Holdings
6. Fraser & Neave
7. Genting International
8. Hong Kong Land
9. Jardine Cycle & Carriage
10. Jardine Strategic
11. Keppel Corp
12. Keppel Land
13. Neptune Orient Lines
14. Noble Group
17. SembCorp Industries
18. SembCorp Marine
19. SIA Engineering*
23. ST Engineering
26. Thai Beverage
27. United Overseas Bank
30. Yanlord Land Group*
* New stocks
The makeover - the biggest since 1998 - involves cutting the number of shares featured while creating 18 new 'sub-indices' to chart different sectors such as energy, property and China firms.
A test version of the new-look STI will start running from Monday on the website of the FTSE Group, a global firm that creates and manages indexes, ahead of the real launch in January.
The STI is compiled via a complex formula involving the market value and prices for a basket of 48 key shares, mostly blue chips.
Those 48 shares will be reduced to just 30 in the new STI. The stocks that made the cut were unveiled yesterday.
Market experts say a slimmer STI will be more appealing to international fund managers, who often have to buy all the underlying stocks in an index in order to create investment products linked to its movements.
It should also create a more vibrant equities market and spark more trading of big shares.
Said Singapore Exchange (SGX) chief executive Hsieh Fu Hua: 'The market will welcome the new 30-stock STI as the revamped index represents and facilitates more efficient management and trading in blue chip stocks.'
Among the outgoing 22 shares are Creative Techno- logy, Venture Corp, Hyflux and MobileOne.
The four new ones to come in are aircraft maintenance firm SIA Engineering, agri-business group Wilmar, and two China-based firms, shipbuilder Yangzijiang and high-end real estate developer Yanlord.
The stocks were chosen according to the FTSE Group's international method. This includes screening a share for adequate free float and measuring its daily average trading volume over the past 12 months.
Said FTSE Group's Asia Pacific director Fran Thompson: 'We've clear, transparent rules to make it easy for anyone to understand and track the new index.'
Shares making up the revamped STI, which will be owned as part of a partnership between Singapore Press Holdings (SPH), SGX and the FTSE Group, will be reviewed every six months starting from next September.
The slimmer STI will be officially launched in January. It will start from the old STI's closing figure the day before the launch, ensuring a seamless transition.
Market experts said there were no surprises on the new STI.
Said CIMB-GK research head Song Seng Wun: 'It's fairly representative of the evolution of the Singapore market.
'The revamped STI will be a more international index, with China shipping and property counters, more representative of the regionalisation of the Singapore bourse.'
Monday will also see the trial launch of 18 new indexes known as the FTSE ST Indexes.
These will track different market sectors such as China stocks, health care, oil and gas, and financial firms, allowing investors to see clearly how each part of the market is faring.
Said Mr Alan Chan, chief executive of SPH: 'The revamp of the STI will ensure that it remains the market benchmark for many more decades to come, supplemented by a whole new family of FTSE ST Indexes.'