SGX launches two new indexes to boost investor demand and interest in Singapore stock market

SINGAPORE - Funds can now track listed companies on the Singapore Exchange (SGX) more easily, thanks to two new indexes – the iEdge Singapore Next 50 Index and iEdge Singapore Next 50 Liquidity Weighted Index.

Launched on Sept 22, they are part of the bourse’s wider plans to boost investor demand and interest, as well as improve market liquidity.

These two indexes will complement existing benchmarks by tracking the performance of the next tier of 50 companies on the mainboard, following the 30 largest ones by market capitalisation on the Straits Times Index (STI).

The iEdge Singapore Next 50 Index will be the headline index, weighted by free float market capitalisation.

Meanwhile, the iEdge Singapore Next 50 Liquidity Weighted Index will provide another lens on market activity by allocating more weight by stocks with the highest trading activity, based on a six-month median daily traded value.

SGX said in a statement on Sept 22 that the indexes were developed using a transparent, rules-based methodology, and they incorporate free float, market capitalisation and liquidity criteria to identify companies that are both sizeable and tradable.

These companies have a minimum turnover of $100,000 in median daily traded value and a minimum market cap of $100 million.

The new indexes highlight the expanding appeal of a wider range of Singapore-listed companies beyond the top tier, and the companies have demonstrated healthy liquidity and rising investor participation since the start of 2025.

“This underscores the demand for tailored indices that capture evolving market dynamics and provide exposure to liquid companies gaining market prominence,” SGX said in the statement.

The new indexes were first announced by

Monetary Authority of Singapore (MAS) deputy chairman Chee Hong Tat on Sept 12

.

“Over time, we hope to see more indices emerge, covering areas such as corporate governance and sustainability – creating a virtuous circle and generating positive momentum for the entire market,” said Mr Chee, who is also Minister for National Development.

The 50 companies in these two indexes come from a wide range of sectors, including industrials, financials, energy, non-energy materials and real estate investment trusts (Reits) – which is the largest sector covered with 17 constituents.

The companies with the largest weights on both indexes are ComfortDelGro, Yangzijiang Financial Holding and Keppel Reit at 5 per cent.

On the Liquidity Weighted Index, iFast Corporation, Singapore Post, Sheng Siong Group, CapitaLand Ascott Trust and Suntec Reit are also the highest weighted at 4 per cent to 5 per cent.

SGX Group’s head of equities Ng Yao Loong said the new indexes are part of the bourse’s efforts to build a more vibrant and inclusive stock market ecosystem: “By showcasing companies beyond the 30 largest, we are helping investors to better capitalise on the full spectrum of opportunities in Singapore’s stock market.

“It also serves as a starting point for market participants to explore innovative ways of tracking the performance of different segments of the Singapore market.”

SGX added in its statement that the new indexes join the bourse’s established global suite of index series, such as the iEdge-OCBC Singapore Low Carbon Select 40 Index and iEdge S-Reit Leaders Index, reinforcing its commitment to both local market depth and global thematic relevance.

Analysts praise potential, call for accessibility down the line

Analysts welcomed the bourse’s announcement, saying that the stock market will stand to benefit from the introduction of new indexes with the potential for more products for investors.

But product issuers have to launch exchange-traded funds (ETFs) or other investment vehicles to track these benchmarks to realise their full potential.

Investors are currently unable to trade directly on the new indexes.

Mr Malcolm Koo, chief executive of CGS International Securities Singapore, said the new indexes will be catalysts for new index-linked products like funds, ETFs and futures that are built around the benchmarked index.

Increased participation on the defined indexes would result in passive and active flows, improving investor interest and demand in new segments of the market, increasing product listings, as well as improving liquidity, which are all “good building blocks” to achieve the goals of the MAS’ Equity Market Development Programme, he said.

SAC Capital’s head of equities research Matthias Chan said the new indexes “are an excellent start” to focus on the next level of companies below those on the STI, and this could mark the beginning of a transformation of the market where broader indexes would evolve into more focused ones based on market cap ranges or sectors.

Mr Chan added that the stocks on the new indexes account for only a quarter of SGX’s total market capitalisation, and there is great potential for an energised equities market in Singapore beyond the STI.

SGX said both indexes will be reviewed and rebalanced every quarter in March, June, September and December, using data from the last index business day of February, May, August and November, respectively.

On liquidity weightage, SGX said the selection of stocks would be affected only if there is a huge drop in liquidity that leads to many stocks no longer meeting the minimum eligibility criteria.

Under normal circumstances, the weighting mechanism would continue to work regardless of the overall liquidity environment.

“Rather than being a bet on a sustained liquidity boost, the index serves as a signal of which stocks are actively traded at any given time,” SGX said.

The full list of constituents will be published on SGX’s website and refreshed monthly to reflect any changes due to corporate actions or rebalancing.

The establishment of new indexes is also a natural evolution step for a bourse, analysts said.

For example, the London Stock Exchange currently operates the Financial Times Stock Exchange (FTSE) 250 Index, consisting of the 101st to the 350th mid-cap blue-chip companies listed on the bourse.

Its subsidiary FTSE Russell operates the Russell 2000 Index on the New York Stock Exchange – a small-cap benchmark commonly used by many ETFs that tracks the 2,000 smallest companies on the Russell Index.

Ms Carmen Lee, head of investment research at OCBC Bank, said that there is room for more than one index in any mature market, and any new indexes must have a good representation of companies that they aim to represent.

Analysts were also optimistic that investor interest would not be diluted or cannibalised by the introduction of new indexes.

CGS International’s Mr Koo said spotlighting the next tier of companies also forms a pathway for them to graduate into the STI: “This visibility can improve analyst coverage, encourage institutional flows, and raise confidence among retail and overseas investors.

“In fact, a well-functioning mid-cap benchmark can act as a stepping stone that catalyses funding, IPO (initial public offering) momentum, and even crossover interest into smaller Catalist names that aspire to enter the mainboard.”

Mr Gerald Wong, chief executive of financial platform Beansprout, said the indexes also serve as valuable tools for benchmarking, helping investors and fund managers assess performance across a broader segment of the market beyond the traditional blue chip names.

Inclusion in a recognised index can attract greater institutional attention and signal credibility to the wider investment community for listed companies.

Mr Wong noted that the lack of accessibility to the indexes could act as a barrier for retail participation and reduce the indexes’ immediate impact in drawing fresh inflows, and added that investor education is vital to help investors understand how to navigate these new index tools.

He said: “Investors need to understand how the indices are constructed, what they represent, and how they align with their investment goals. Such investor education initiatives will go a long way in ensuring the broader community is equipped to make informed decisions using these indices.”

Maybank’s head of research Thilan Wickramasinghe said establishing new indexes alone would not be sufficient to generate momentum or enhance liquidity in the small and mid-cap sector.

“For many of these companies to qualify for institutional investment, deeper structural reforms are necessary. This includes increasing free floats; improving trading multiples through balance sheet and business model optimisations; and fostering better communication with investors,” he said.

“Only then can we expect meaningful changes to drive greater investment in this segment of the market.”