The
Straits Times Index represents the stock trading of the 50 companies that are listed on the Singapore Exchange. Also popularly known as STI, Straits Times Index is a market-value weighted index.
The
Straits Times Index is managed and calculated by the newspaper called Straits Times and it happens to be the most important equity index of the Singapore stock exchange. The index was launched in 1998 August. STI is comprised of the 50 largest companies of the Singapore exchange. The STI is based on the modified market value-weighted index. Though the index is complicated to calculate, it makes sure that the index value is influenced the most by the largest firm of the exchange. The 50 components of the STI represent 60% of the total Singapore Stock Exchange trading market value. The STI is formally reviewed at least once in a year.
According to the announcement made by the Singapore Exchange, Singapore Press Holdings and London's FTSE Group on 6 June 2007, the Straits Times Index will go under major overhaul by the end of year 2007.
The major change that will take place is that the number of component stocks will be decreased from 50 to 30. There will be an introduction of 18 new indices also. From the month of September, the new STI indices will be published on the FTSE website. Until the final switchover from the current STI to the new STI is made in December, both the indices will be published simultaneously.
The STI index is calculated by the following formula
It = (Pn Pt Qt Wt) / Dt
Where It = Straits Times Index
Pn = Summation of n stocks
Pt = Price
Qt = Number of shared that are issued
Wt = Weight, which is usually equal to 1
Dt = Divisor
In order to represent the picture of entire economy, the STI components are selected from all parts of the economy. The different industries from where the stocks are selected for Straits Times Index are - commerce, finance, manufacturing, multi-industry, real estate investment trust, service, transport, storage and communications.