HOW can a company qualify to be part of the Straits Times Index (STI) and any of the other FTSE ST indexes?
To qualify for inclusion in the STI and any other FTSE ST index, except the FTSE ST Fledgling Index:
- A company must have a sufficient 'free float'.
A free float refers to the number of shares readily available in the market. It excludes those held by directors, major shareholders and employees. A free float must be more than 15 per cent of a company's total number of shares.
- The company's shares must be sufficiently 'liquid'. Liquidity refers to the level of trading activity.
The median daily share trading by value must be at least 0.05 per cent of the free float for 10 of the past 12 months.
For the STI, the top 30 companies ranked by market capitalisation and those that meet the free float and liquidity requirements are included.
When and how will the index's constituents be reviewed?
Reviews will take place twice a year - in March and September - based on data from the last working day of February and August.
The first review will be in September next year.
All reviews will be conducted by a specially constituted FTSE ST Advisory Committee.
Under what circumstances will stocks be dropped from or added to the STI?
At the semi-annual review, qualifying stocks will be automatically included in the 30-stock STI if they are ranked 20th and above in terms of market capitalisation.
They will be automatically dropped if they are ranked 41st or lower.
The five highest-ranking non- constituents of the STI will be placed in a Reserve List. The list will be used in the event that one or more constituents of the index are deleted during the period leading up to the next review.
Where can I get the trial values of the new STI during the launch?
Closing index values can be found on www.ftse.com/st from Monday.
The trial values, which start at 1,000 for all indexes, will be mainly for testing purposes.
Come the 'switchover date' in January next year, when the new STI and the other indexes are officially launched, the numerical value of the new STI will start from where the current index leaves off the day before.
How soon before an initial public offering (IPO) can be included in the index?
Some IPOs can be included immediately, if they are large enough.
If it is not an early entrant, it must have a minimum trading record of at least 20 days once it has met free float and liquidity requirements.
How closely does the new STI correlate with the current index?
Regressions show that the new STI tracks the current index with 99 per cent accuracy over the past one, three and five years.
It tracks the current STI with an accuracy of 98 per cent over the past eight years.
