Straits Times Index

Part of Singapore Stock Exchange (SGX)

Benoy Paul Jose.

Chennai Business School – BFS Varsity.

12/25/2009

This is an attempt to understand the Straits Times Index, its compositions and its
functioning. A sneak peak of the Singapore Economy is also covered.
 Snap Shot
1. Introduction.

2. Weighting & Calculations.

3. Eligibility.

4. Index facts.

5. Singapore economy.

INTRODUCTION
 The Straits Times Index (also called the STI) is the benchmark index for
the Singapore Exchange.

 It covers 30 companies which are deemed representative of the Singapore

market.

 The Singapore Exchange works with the UK Based Financial Times Stock
Exchange 100 Index (UKX-LN) in order to maintain the FTSE ST Index
Series.

WEIGHTING & CALCULATIONS

 The STI was evolved as a market capitalization weighted index. It involves
the total market capitalization of the companies weighted by their effect
on the index.

 So the larger stocks would make more of a difference to the index as

compared to a smaller market cap company.

 The basic formula of the index is :

Index level= Σ [(Price of stock * Number of shares)* Free float factor] /Index
Divisor.
ELIGIBILITY
 All classes of the ordinary shares in issue the exchange are eligible for
inclusion in the STI.

 Convertible preference shares and loan stocks are excluded until

converted. Companies whose business is that of holding equity and other
investments.

 Free float restrictions apply to all stocks, but the stock has to have at least
15% of the shares being traded on the exchange at any given time.

 The securities must have a turnover of at least 0.05% of their shares in

the market (after the application of any kind of weighting) based on a
median daily trade per month in ten of the twelve months of the year.

INDEX FACTS
 The 30 representative companies.

 Sector Breakdown.
The 30 representative companies.

Sl.N Company Sl.No. Company

o.

1. Capitaland 16. Noble Group

2. Capitalmall Trust 17. Olam International

3. City developments 18. Overseas-Chinese Banking Corp

4. Cosco Corp Singapore 19. Sembcorp Industries

5. DBS Group Holdings 20. Sembcorp Marine

6. Fraser and Neave 21. SIA Engineering

7. Genting International PLC 22. Singapore Airlines

8. Golden Agri-resources 23. Singapore Exchange Limited

(S68 - SG)

9. Hong Kong Land Holdings 24. Singapore Press Holdings

10 Jardine Cycle and Carriage 25. Singapore Technologies

Engineering

11. Jardine Matheson Holdings 26. Singapore Telecommunications

12. Jardine Strategic Holdings 27. STARHUB

13. Keppel Corp 28. United Overseas Bank

14. Keppel Land 29. Wilmar International

15. Neptune Orient Lines 30. Yanlord Land Group

Sector Breakdown for STI.
SINGAPORE ECONOMY
 The economy of Singapore is a highly developed state capitalist mixed
economy.

 The government intervention in the market is kept at a minimum.

 The state controls and owns firms that comprise at least 60% of the GDP
through government entities.

 It has an open business environment.

 Is relatively corruption-free and transparent.

 Price stability.

 Has one of the highest per capita GDP in the world.

 The ‘Singapore Model’ – nickname given to its innovative yet steadfast

form of economics that combines economic planning with free-market.

 Main source of revenue:

 Export of;

a. Electronics,

b. Chemicals,

c. Services.

 Main Imports:

d. Natural resources.

e. Raw materials.(Machinery & Equipments, Mineral

Fuels, Chemicals and Foodstuffs.)

Thus they purchase goods and refine for re-export.

 GDP factors:

 GDP – US$181,948 millions.

 GDP Per capita (-PPP) – US$ 49,433.

 Main contributor – Service sector; 66.8% (year 2008).

 Gross domestic expenditure on R&D – 2.40% (year

2006).
 Largest Companies :

 Singapore Telecom,

 Wilmar International,

 DBS Group,

 United Overseas Bank &

 Singapore Airlines.

 Major Trading Partners:

 Malaysia.

 China.

 United States.

 Hong Kong.

 Indonesia.

 Japan.

 Trade Overview.
(http://www.singstat.gov.sg/stats/visualiser/trade/trade.html)

...END…