Plastics Sector Index: List of Stocks 0 comments

("Last price" refers to price on 9 Jun 06, the base index date)

My new index is the PSI. The "P" stands for Plastics, not pollutants. Apparently it is an index several readers are interested in, according to some straw polls I took. Which is also good, because the Plastics index provides a contrasting view to the other indices I've been tracking, which (save for the Env&Water index) have been trending up significantly since June.

The list of stocks totals 10, and there are only two main factors that guide inclusion/exclusion:
1. Market cap
2. Trading liquidity

The index will be weighted by market cap, as per normal.

Some points:
1) The index is likely to be positively correlated to the fortunes of the electronics industry (in particular, Singapore's), in addition to oil prices, because the key component stocks like Hi-P, FuYu, Sunningdale, Huan Hsin, First Engg) are plastic moulders for this industry. For information, the four key sub-sectors that Singapore plastic injection companies rely on are: wireless, printers, consumer/home appliances, and automotive.
2) China Precision fabricates plastic parts for its tuner components, while Full Apex uses PET chips for its bottles which are related to plastics. Hence both are included. However, given that they are excluded in most analyst reports on the plastics sector, I used an index factor of 0.5 on them to scale down their importance (by market weight).
3) Smaller plastic moulders like Avaplas, Juken, TTL are excluded because they are completely illiquid and make little impact.

As before, I have backdated the index such that it starts on the same base as my China Stocks Index and Energy Sector Index ie. on Jun 9 2006. Hence there is a ready curve from Jun 9 till today. At last count (20 Oct) the index stands at 91.8, which means on average the plastics index component stocks have dropped nearly 10% over the last four months even as the STI rallied.

As before, placements, delistings, rights issues of the index stocks will adjust the base market cap. So far I've had no chance to. The maths as follows:

1. Rights Issue
Adjusted Base AMV = Old Base AMV x (Old Current AMV + Payment for Rights)/(Old Current AMV)

2. New Listing
Adjusted Base AMV = Old Base AMV x (New Current AMV including New Listing)/(New Current AMV excluding New Listing)

3. Delisting
Adjusted Base AMV = Old Base AMV x (Old Current AMV excluding Delisting)/(Old Current AMV including Delisting)