SGX, SPH and FTSE ink deal to redesign ST Index - Dec 01, 2006 (BT)

BackDec 01, 2006

The Straits Times / The Business Times News On SPH

SGX, SPH and FTSE ink deal to redesign ST Index

They aim to augment STI with a new set of local, regional indices.

By R Sivanithy
Dec 01, 2006
The Business Times

(SINGAPORE) Singapore Exchange (SGX), Singapore Press Holdings (SPH) and the FTSE Group have signed a memorandum of understanding (MOU) to create a broad range of indices for the local stock market.

In a joint statement yesterday, they said that they would review and relaunch the Straits Times Index (STI) and explore and introduce additional indices, so as to create a whole family of them.

'While the STI will remain the main benchmark index, it will be augmented with a new set of local and regional indices covering a wider range of the investable opportunity set,' the statement said.

'The expanded series will be used for the trading and benchmarking of financial products such as institutional and retail funds, exchange-traded finds (ETFs), derivative contracts and other such products as identified by the parties.

'The indices will be designed using FTSE's international methodology standards, will be free-float adjusted and will be based on the Industry Classification Benchmark (ICB).'

ICB is a classification system created by Dow Jones Indexes and FTSE last year.

The system is supported by the ICB Universe Database, which contains more than 40,000 companies and 45,000 securities worldwide from the FTSE and Dow Jones universes. This coverage makes the database a comprehensive tool for global sector analysis. ICB is expected to become a global standard.

The market capitalisation-weighted, broader-based Straits Times Index was introduced in 1998 to replace the price-weighted, narrowly focused Straits Times Industrials Index.

It has been reshuffled periodically and currently has 48 components. Criteria for inclusion include size and liquidity.

SGX chief executive officer Hsieh Fu Hua said that the collaboration with SPH and FTSE would facilitate analysis and comparison of SGX-listed companies with those of other markets, helping investors make better decisions.

The redesigned STI and other associated indices are expected to be unveiled next year.