The SGX Nifty is a benchmark index for the Singapore stock market. It is used by traders and investors to gauge the performance of the market.
If you want to invest in the Singapore stock market, you’ll probably hear people refer to the SGX Nifty and how it’s doing. But what exactly is the SGX Nifty? How does it work? Where can you find it? Learn all about the SGX Nifty in this guide, including how to read it and whether it’s something you should be using when you’re investing your money or deciding where to buy stocks and shares.
What is the S&P Straits Times Index (STI)?
It contains 50 leading shares listed on the Singapore Exchange (SGX). The selected companies represent all sectors in Singapore’s economy – from consumer goods to banking, construction, shipping, healthcare, telecommunications, and manufacturing.
Why does it matter?
Gaining an understanding of how markets work, understanding which market is appropriate for you, what other markets look like, or even just wanting to stay up-to-date on the performance of different assets are all reasons that people may find themselves using various indexes as well as gauging performances over time. Some indexes can also be linked directly with indices that represent currencies and commodities to keep track of shifts in their values over time. Other indexes may be used in comparison with one another or against an established historical average to predict how some asset should be valued at any given point in time.
How does it work?
The index has been calculated since 1969 by Thomson Reuters, one of the largest global providers of information services, under both the S&P Asia Pacific Index (1969-1991) and the SET Index (1992-present). The calculation methodology can be found here. The constituent companies are selected on a rolling quarterly basis, with each company given an equal weighting in determining price movement during that period. Companies are also weighted on the industry sector as follows: Consumer Staples 14%, Energy 16%, Financials 9%, Healthcare 18%, Industrials 13%, Information Technology 13%, and Real Estate 3%.
What makes it different from other indices such as FTSE, Dow Jones, etc.?
It consists of 50 stocks with higher market capitalization and trading volumes selected from the most actively traded shares on NASDAQ, ranging from consumer goods to industrial goods. All companies are locally incorporated or established in Singapore or have their primary listing on the bourse with qualifying issuer’s rights. Its major components include some of the top blue chips such as UOB (United Overseas Bank) and OCBC (Oversea-Chinese Banking Corporation). The price is computed by continuously consolidating trades between different markets based on indices prices disseminated at 15-minute intervals throughout the day, using volume-weighted average trading prices
Who uses this index?
Every day, individual stocks from different sectors will be added or removed from the index. These changes are based on how these companies perform with each other and the underlying economy of Singapore. The total value or weighting of each company (as it stands today) in this specific mix determines how much contribution it has to this index. The weights are then reassessed every year to make sure that they keep up with how an accurate representation of what’s happening right now should look like within this particular economic climate, about its sectoral orientation, as well as economic conditions prevailing globally too
Who needs this info now?
What you need to know about the SGX Nifty
The S&P Dow Jones Indices and Straits Times, our Index Provider, manage indices (such as the S&P 500) that are widely used in various areas such as equity portfolio construction, regulatory mandates, fund management products (hedge funds), individual wealth management and development of asset pricing models.