SGX to launch index that tracks non-STI listcos: Chee Hong Tat

[SINGAPORE] The Singapore Exchange (SGX) will be launching an index that tracks listed companies that are not constituents of the Straits Times Index (STI), as part of the regulator’s efforts to showcase its broader equity market, said Second Minister for Finance Chee Hong Tat on Friday (Sep 12).

“This new index will provide a useful lens to track how the next tier of large and liquid companies are evolving – whether through business-model transformation, improved governance or stronger capital-management initiatives,” said Chee, who is a board member of the Monetary Authority of Singapore (MAS) and also minister for national development. He is also the chair of the equities review group set up by the central bank in August last year to look into strengthening Singapore’s equities market.

STI, the benchmark index for Singapore’s stock market, is made up of the 30 largest companies by market capitalisation. However, it represents only a portion of SGX’s listed companies.

Speaking at a conference organised by the Singapore Institute of Directors, Chee said investor interest in listed companies outside STI is growing – partly as a result of a new investment initiative which will channel S$5 billion to asset managers with a strong focus on Singapore equities. It aims to boost liquidity of its capital markets.

“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,” he added.

Indices are a form of recognition mechanism for companies, serving as useful tools that can create visibility for companies and spotlight those that excel. They also track the performance of different industry or market segments.

The setting up of a new index is one of the additional measures Chee unveiled on Friday, with the broader aim of boosting Singapore’s stock market.

Over the last few months, the group has launched several initiatives, in addition to the S$5 billion equity market development programme. Others include tax incentives for companies listing in Singapore, as well as consolidating listing and prospectus disclosures under a single regulator to speed up the process of reviewing a listing.

Beyond the new index, Chee said the review group is working with SGX to provide more platforms that could amplify companies’ efforts and market presence. This is especially so for smaller companies that tend to struggle for more visibility.

“SGX will hold investor roadshows or trade fairs which companies can participate in, to gain exposure to institutional and retail investors. SGX may also arrange for media features and engagements designed to help profile listed companies that have a good story to share with the investing community,” he added.

However, listed companies also need to put themselves forward by communicating their strategic plans, holding regular investor engagements, and making themselves more accessible.

Chee said companies can share views on their outlook and prospects – which is commonly done in overseas markets – as it gives investors greater visibility of their trajectory and also demonstrates managements’ confidence in delivering strategic objectives.

As there are concerns about the potential legal exposure when companies disclose such information, Chee said MAS will review how it can provide more clarity on its regulatory framework. As a result, there can be more open communication without compromising on market integrity.

“We hope this will give companies greater comfort and assurance to have meaningful forward-looking engagements with your investors,” he added.

SGX is also reviewing how companies can do more to disclose policies such as dividend and investor relations, as these would help investors understand the company’s capital management approach, engagement practices, and how management will deliver shareholder value.