The Singapore Exchange (SGX) released its first batch of in-house stock indexes yesterday as part of a strategy to enable more exchange- traded fund (ETF) products to be issued here.
The 11 new thematic indexes cover around 200 constituent stocks across four sectors - real estate, healthcare, mineral and oil and gas as well as maritime and offshore.
The SGX S-Reit (real estate investment trust) 20 Index, for example, measures the performance of the 20 largest and most tradable S-Reits while the SGX All Healthcare Index tracks 29 shares, including healthcare providers, medical manufacturers and biotech firms.
Investors can access these indexes - along with the relevant data points such as the covered sector's total return, average yield or turnover velocity - for free on the SGX's website or through vendors such as Bloomberg.
SGX vice-president for index services Simon Karaban told a briefing yesterday: "Our index business is about providing the level of transparency and providing greater depth of information to encourage greater product issuance and investor participation."
The bourse started its index business unit, the Index Edge, in October with a key aim to explore new opportunities in the ETF segment.
ETFs like the SPDR Straits Times Index ETF track the performance of a designated stock or commodity index. As SGX rolls out more indexes, the benchmarking of more sectors can attract more ETF products to be issued here.
"There is around US$230 billion (S$324 billion) in assets under management for ETF products in Asia, which represents less than 10 per cent of global ETF product assets," said Mr Karaban.
"Given the projected wealth in Asia, we see a significant opportunity for ETF assets to grow, and we as an index business will be well positioned to capture that growth."
The new push is already showing results, with SGX in talks with potential issuers over an S-Reit ETF, which is expected to enter the market in six months' time.
More new indexes are on the cards following those launched yesterday: A consumer goods index is set for release next month and a sustainability one is planned for February. The bourse can build 50 or more indexes in the long run, Mr Karaban added.
Remisier Alvin Yong welcomes the latest SGX initiative, although he has some reservations. He said: "The more data provided by SGX, the better. But how useful it is for SGX will depend on how widely adopted the indexes are.
"I don't see a game-changer at the moment, given that there are already established indexes provided by FTSE and MSCI. Much of the market data is also already available to the public."
The British stock market index provider FTSE has over 20 indexes tracking different segments of Singapore's stock market, such as the FTSE ST Financials, FTSE ST China and FTSE ST Industrials.
Mr Karaban said the SGX indexes are better regulated and more relevant to the market, adding: "Who better than SGX to provide that regulatory framework and that confidence to the investors? We are well placed to raise the bar for index governance."
He also said: "A lot of index providers simply apply their existing methodologies to Asian indexes. We're going to offer it differently.
"We are going to create our indexes in a highly consultative manner, working with issuers and investors to arrive at indexes that really make sense for the market."