Singapore Exchange (SGX) launched yesterday SGX Thematic Indices, a new suite of equity indices under its index business, SGX Index Edge.
Launched in October 2015, SGX Index Edge was launched to offer comprehensive index services for issuers, asset managers and investors in Asia, as well as to better profile key segments of its securities market and deliver bespoke calculation capabilities that will enable clients to build tailored indices. As part of this, SGX Thematic Indices is now offering a suite of equity indices based on sectors that have traditionally featured prominently across the SGX securities market and contribute significantly to the Singapore economy including real estate, healthcare, minerals, oil & gas and maritime & offshore sectors.
The aim of the new thematic indices is to provide better transparency and information around four key segments of the securities market in Singapore, said Simon Karaban (pictured), head of index business at SGX. "Ultimately what we are trying to do is to better profiling some segments of the market to help investors with a series of benchmarks and tradable indices," said Karaban. "We have developed these indices with ETF providers in mind as they are tailored to provide diversification and highly liquid strategies."
According to Karaban, the use of these indices in the structured products market will depend on investor appetite for any of those themes as structured products are more focused on single market indices. "Investment decisions are driven by a view which sometimes can be better achieved by trading rather than a buy and hold approach," said Karaban. "However, these indices can help with asset allocation strategies and fit with products that are more trading oriented."
The 11 new indices will help to profile the underlying securities and offer insights into both risk and performance associated with the sectors, and will further enhance the understanding of investment opportunities and what drives returns in these markets, said Karaban.
Targeting the growing ETF market in Asia, the indices will also provide benchmarks linked to key themes in Singapore and encourage the creation of ETF products that are invested in Singapore stocks.
"We have a number of developments in the pipelines as we build the SGX suite of indices," said Karaban. "Sustainability is one of the areas we are looking into and we are also talking to research firms with the view of building partnerships for the creation of smart beta indices." These [smart beta indices] will not be limited to Singapore but will be developed as customised benchmarks to be deployed across the Asia-Pacific region, said Karaban.
"Beyond that we are also working in developing new customised indices for structured products issuers," said Karaban. "We want to address the needs of structured products issuers and we are also exploring the possibility to act as an index sponsor with investment banks or as a calculation agent for their proprietary indices."
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