New HotStocksNot Sector Indices 0 comments

As I mentioned in an earlier writeup on the new FTSE indices, the sector indices produced by them are not up to scratch for various reasons (will elaborate individually below). Meanwhile SGX has discontinued the previous sector indices that they used to generate. I don't really know what they are doing. So I decided to produce several own sector indices to fill the gaps. Below are my new sector indices with the component stock listing, using the same index calculation methodology/conventions as for my current sector indices. They will start running effective tomorrow (14 Jul).

New Indices

The new sector indices are:
1. Commodities index (this theme has to be tracked given its prominence)
2. Construction index (tracks the remaking of Singapore theme)
3. Financials index (FTSE Financials index covers both financials and real estate and hence is confusing)
4. Property index (FTSE Real Estate index includes China stocks; my property index is meant to track Singapore developers)

To recap, component stocks are typically chosen on the basis of the following:
1. Market cap
2. Trading liquidity
3. Track record
4. Expectation of future performance (stability, growth, trading liquidity)
5. Intangibles (eg. institutional coverage, mindshare in investors' and traders' general attention span)

Commodities Stock Index

Note: All market caps as of 11 July 2008.

Component stock	Market Cap (S$M)	Adjusting Factor
HotStocksNot Oil&Gas Index	174.62*	100.00
Wilmar	30523.60	0.25
Noble	6945.60	1.00
Olam	4060.40	1.00
Golden Agri	8030.60	0.50
Indofood Agri	3228.60	1.00
Straits Asia	3278.50	1.00
STX Pan-Ocean	5825.80	0.50
Mercator	523.00	1.00
GMG Global	484.90	1.00

* The oil and gas commodities segment, instead of being covered through individual component representative stocks, is instead represented by the index value of my existing Oil & Gas sector index. The index value is multiplied by the adjusting factor (which is why it is so big) to obtain its nominal representative "market cap" in the Commodities index (its initial weight is about 1/3 of the total Commodities index)

Construction Stock Index

Component stock	Market Cap (S$M)	Adjusting Factor
Tat Hong	932.20	1.00
Rotary	417.40	1.00
United Engineers	701.80	0.50
Hong Leong Asia	659.10	0.50
Pan United	322.50	1.00
CSC	250.10	1.00
Chip Eng Seng	230.30	1.00
Yongnam	194.80	1.00
Low Keng Huat	166.20	1.00
HG Metal	152.90	1.00
Lian Beng	124.50	1.00
Tai Sin	117.70	1.00
Koh Brothers	98.30	1.00
Hiap Seng	83.50	1.00
KSH	52.90	1.00
OKP	58.40	1.00

Financials Stock Index

Component stock	Market Cap (S$M)	Adjusting Factor
DBS	28947.90	0.50
UOB	28557.90	0.50
OCBC	25575.30	0.50
SGX	7437.10	1.00
Great Eastern	7819.20	0.50
UOB-Kayhian	1217.50	1.00
Hong Leong Finance	1506.70	1.00
Kim Eng	906.10	1.00

Note that because the market caps of the three banks are so big, the adjusting factors of 0.5 are used to tone down their weighting in the index to prevent their overwhelming representation.

Property Stock Index

Component stock	Market Cap (S$M)	Adjusting Factor
Capitaland	16430.50	1.00
City Development	10202.40	1.00
Hong Kong Land	13428.50	0.50
UIC	4063.60	1.00
Keppel Land	3490.00	1.00
Wheelock	2058.10	1.00
Guocoland	1961.20	1.00
Allgreen	1447.20	1.00
Wing Tai	1166.30	1.00
Hotel Properties	1275.80	0.50
Ho Bee	587.50	1.00
Hong Fok	418.80	1.00
SC Global	447.50	1.00
Orchard Parade	345.50	1.00
Guthrie	323.40	1.00

FTSE Sector Index
The FTSE REIT sector index will be included in the daily update. It provides a good update to the market performance of the REIT sector.