New SGX indices: how they compare to the STI and what the 50 stocks are

[SINGAPORE] The Singapore Exchange (SGX) has launched two new indices – the iEdge Singapore Next 50 Index and the iEdge Singapore Next 50 Liquidity Weighted Index. 

Unveiled on Monday (Sep 22), these benchmarks track the performance of the 50 largest and most liquid mainboard-listed companies that fall outside of the flagship Straits Times Index (STI). 

The indices track the same basket of stocks using different weighting strategies – the iEdge Singapore Next 50 Index is weighted by market capitalisation and the iEdge Singapore Next 50 Liquidity Weighted Index is weighted by liquidity.

Their launch aims to increase visibility of mid-cap companies, broaden access to a wider range of companies in Singapore’s equities market and to allow investors to diversify their exposures across different sectors.

BT compares the different indices against the STI.

iEdge Singapore Next 50 Index

The iEdge Singapore Next 50 Index is a market-capitalisation weighted index which aims to track the performance of the next 50 largest companies listed on the SGX Mainboard, beyond the 30 largest companies.

This index is designed to be a barometer for the performance of Singapore’s mid-cap segment. The index comprises a mix of well-known local enterprises across sectors such as industrials, financials and energy and Reits.

The latest 12-month dividend yield of this index is 5.85 per cent, according to the factsheet.

The constituents’ free-float market capitalisation – which accounts only for shares available for public trading – is used to determine the weighting. 

SEE ALSO

iEdge Singapore Next 50 Liquidity Weighted Index

The iEdge Singapore Next 50 Liquidity Weighted Index includes the same basket of 50 stocks as its market-cap weighted counterpart but differs in weighting methodology – it is weighted by turnover to capture the relative liquidity of the constituents.

This index gives greater prominence to stocks that are more frequently traded. The weight of each constituent is determined by its trading liquidity, specifically its median daily trading value over a specified period. This approach provides a different lens on the mid-cap segment, emphasising stocks that are of high interest to active traders.

The underlying companies are identical to those in the iEdge Singapore Next 50 Index. However, due to the liquidity-based weighting, companies with higher trading volumes will have a larger impact on this index’s movements.

The Straits Times Index

The STI is a market capitalisation-weighted index that tracks the performance of the 30 largest and most liquid Singapore-listed companies. 

Covering 85 per cent of the Singapore equity market by capitalisation as at August, its constituents span sectors including telecommunications, real estate, industrials, technology and financial services. 

The three local banks form more than 50 per cent of the STI by combined weight as at August, with DBS the largest constituent based on market capitalisation. 

Other notable names on the STI include Temasek-backed companies such as telco giant Singtel, national carrier Singapore Airlines, ST Engineering and asset manager Keppel. 

The STI offers investors exposure to companies that make their money in Singapore and overseas – around half of the revenue of the index’s constituents is generated abroad. The dividend yield of the index is 4.48 per cent, according to FTSE Russell, which is one of the managers offering the STI ETF.

Dating back to 1966, the STI originated shortly after Singapore’s independence. It was formerly named the Straits Times Industrial Index as a reflection of the fledgling city state’s industrial ambitions in its early years. It was renamed the STI in 1998.