An index is used to measure the performance of a basket of securities, it is often traded as mutual funds and ETFs, and fund sponsors attempt to create portfolios mirroring the components of a certain index. Otherwise, an index can also feature a rate of return that follows a particular index with a cap on the returns.
From Southeast Asia, some of the offerings of indices are from Singapore Exchange (SGX), Bursa Malaysia Derivatives Berhad (MDEX), and Thailand Futures Exchange (TFEX). These indexes are crucial to the region as it provides valid benchmarks against which to measure investment performance for a strategy.
To understand more about Southeast Asian Indices, this article will introduce several popular choices as well as the performance of these indexes.
Bursa Malaysia Derivatives Berhad (MDEX)
MDEX offers FTSE Bursa Malaysia Kuala Lumpur Composite Index Futures (KLCI), the index allows traders to gain exposure to underlying FBM KLCI constituents, which is the performance of the 30 largest companies from the region. In 2009, KLCI was enhanced to ensure that the index was robust in measuring the national economy with a growing linkage to the economy.
The two main eligibility requirements for trading the index are free float and liquidity. The free float requires that companies have a minimum of 15% free float, it is applied to the market capitalization of each company in accordance with the banding specified in the FTSE Ground Rules.
Correspondingly, the liquidity screen is also applied to ensure that the company’s stock is liquid enough to be traded.
Figure 1: Chart Source: Trading Economics
Based on Trading Economics, equities in Malaysia lost 18 points or 1.2% to 1,477m snapping a six-day winning streak, as traders entered the first trading session of the new year.
Singapore Exchange (SGX)
SGX is one of the few Southeast Asian exchanges that offer a diverse range of indices. These indices are differentiated based on their purposes and underlying constituents. For example, SGX Index Edge (iEdge) and Scientific Beta produce a series of indices targeted to reduce carbon emissions and are designed to help institutional investors benchmark performance while aligning with their sustainability mandates. Most recently, increased interest in ESG performance, ESG factors, and ESG investments have also increased the value of these innovative indexes.
Some of the IEdge indices include:
- iEdge SG ESG Index
- iEdge SG ESF Transparency Index
- iEdge Singapore Low Carbon Index
- iEdge OCBC Singapore Low Carbon Select 50-Capped Index
Apart from these indexes, FTSE Straits Times Index is also a popular option. The index is Singapore’s benchmark index and is commonly referenced as an indicator to measure the health of the stock market.
Figure 2 : Chart Source: Trading Economics
Based on Trading Economics, the stock market in Singapore has dropped 33.5 points or 1% to 3,217.8 in the morning deals on 3/1/2023, the first trading session of 2023.
Thailand Futures Exchange (TFEX)
Thailand Future Exchange offers SET50 Index Futures. The index is the first product to be launched from the exchange and it is calculated from the stock prices of the top 50 listed companies on the Stock Exchange of Thailand.
Figure 3: Chart Source: Trading Economics
Based on Trading Economics, the SET 50 increased 9 point or 0.90% since the beginning of 2023, according to trade on the contract for difference (CFD) that tracks this benchmark index from Thailand.
Alternatively, Thailand exchange offers other non-index products such as 10 Baht Gold Futures, 50 Baht Gold Futures and Gold Online Futures.
Other Southeast Asian Indices
While all the above-mentioned indexes are tradable through Orient Futures Singapore, there are also several other exchanges that offer other forms of indices.
The Indonesia Stock Exchange (IDX) Composite had been brought to attention as one of the best-performing major indexes of the year in Southeast Asia. The index boasts a total of 713 constituents, with the top few performing including the Bank Central Asia Tbk and Bank Rakyat Indonesia (Persero) Tbk.
Beyond the Southeast Asian region, MSCI ESG indices which were built on ESG ratings and ESG scores are alternative picks.
Start Trading With Orient Futures Singapore
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