MSCI Singapore Index rose 10.8% in January 2012

• The MSCI Singapore Free Index (SiMSCI) rose 10.8% in January 2012 after declining 20.0% in 2011. In the 10 year period leading into 2012, the SiMSCI  has maintained an annualised gain of 4.1%.

• Over January 2012, all  five sectors of the SIMSCI that comprise the SiMSCI produced positive returns which ranged from 0.1% (Telecommunication Services) to 15.6% (Industrials).

• Over the same period, of the eleven industries of the SiMSCI, performances ranged from 0.1% (Telecommunication Services) to 22.1% (Food & Staples Retailing).

• SiMSCI constituent performances over the month of January 2012 ranged from -2.7% for Starhub to +34.9% for Cosco Corp Singapore.

There are two key benchmark indices in Singapore, the FTSE Straits Times Index and the MSCI Singapore Free Index. In the ten years leading into 2012, the FTSE Straits Times Index (STI) has maintained an annualised gained of 4.9%, while the MSCI Singapore Index (SiMSCI), whose composition of sectors and industries are the focus of this update, has maintained an annualised gain of 4.1%.

In the month of January 2012, the STI gained 9.8% and the SiMSCI rose 10.8%.

These two indices have differences in terms of constituents, weightings and pricing levels. The STI is made of 30 constituents while the SiMSCI is made of 32 constituents. There are 26 mutual constituents that account for approximately 85 % of the STI and 93% of the SiMSCI market capitalisation.

The SiMSCI has five sectors and eleven industries. According to MSCI Inc, the SiMSCI is weighted (as of 1 February 2012) 44.8% to Financials, 25.8% to Industrials, 11.7% to Telecommunication services, 9.3% to Consumer Discretionary and 8.4% to Consumer Staples.

The list of sectors, respective industry and component stocks is tabled below. In the first month of 2012, all five sectors that comprise the MSCI Singapore Index produced positive returns which ranged from 0.1% (Telecommunication Services) to 15.6% (Industrials). The industrials sector was the top performing sector, followed by Financials and Consumer Staples.

Index watchers will note that the two sectors, Industrials and Financials, that posted the greatest gains in January 2012 were the same sectors that posted the greatest declines over 2011.

The five sectors tabled above are comprised of eleven industries. The performance of these eleven industries in the first month of 2012 are tabled below. Industry performances ranged from 0.1% (Telecommunication Services) to 22.1% (Food & Staples Retailing). The top performing industry over the month in January 2012 was Food & Staples Retailing, followed by Capital Goods and Banks.

Taking a closer look at the constituents and their respective sectors and industries, all the constituents, except Starhub, recorded positive returns in the first month of 2012.  In the month of January 2012, the top performing constituent of the SiMSCI was Cosco Corp Singapore which inclined 34.9%. Cosco Corp Singapore belongs to the Industrials sector and Capital Goods industry and as the table details, was also the biggest declining constituent in 2011.

SiMSCI Futures & ETFs

Futures and Exchange Traded Funds are specified investment products. SGX provides SiMSCI futures and options for trading between 8.30am and 5.15pm and 6.15pm and 2.00am the next day.

SiMSCI Futures can also be used as a medium to hedge against the effect of a falling market upon an existing Singapore stock portfolio. While the investor would buy SiMSCI futures, or open a long position, to benefit from price rises, the hedger might sell SiMSCI futures, or open a short position, to protect against price declines.

SGX also offers a non-leveraged medium to participate in the SiMSCI through an ETF. This is a cash-based ETF, managed by iShares^®. The cash-based categorisation implies this ETF holds the same stocks in the same weightings as the benchmark index or a sample of constituent stocks that statistically representing the index. Details of the ETF are tabled below.

Specified Investment Products

As part of the Monetary Authority of Singapore’s (MAS) initiative to introduce stronger measures and enhance requirements to further safeguard the interests of individual investors, Futures and ETFs have been categorised as Specified Investment Products (SIPs).

SGX SIPs have structures, features and risks that may be more complex in nature. The MAS requires broking firms to ascertain whether an individual investor has the relevant knowledge and experience to understand the risks and features of SIPs before allowing the individual to open an account to trade SIPs listed on both securities and derivatives markets.

SGX has introduced two online initiatives, a Customer Account Review Module and an Online Education programme, to support individual investors in their understanding and trading of SIPs listed on SGX. Click here to access these initiatives.

Market Updates – Daily Market Focus and Product Guide

Never miss another update! Click  to subscribe to receive Market Updates automatically for viewing on your internet browser or other programs.

www.sgx.com

This document is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject SGX to any registration or licensing requirement. This document is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This document is for general circulation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. Further information on this investment product may be obtained from www.sgx.com. Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products is not indicative of their future performance. Examples provided are for illustrative purposes only. While SGX and its affiliates have taken reasonable care to ensure the accuracy and completeness of the information provided, they will not be liable for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information. Neither SGX nor any of its affiliates shall be liable for the content of information provided by third parties. SGX and its affiliates may deal in investment products in the usual course of their business, and may be on the opposite side of any trades. SGX is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore. The information in this document is subject to change without notice.

Futures or options contract on any MSCI index are not sponsored, guaranteed, endorsed, sold or promoted by MSCI, any affiliate of MSCI or any other party involved in, or related to, making or compiling any indexes (but expressly excluding the exchange.)  MSCI bears no liability of any kind with respect to such contracts.