The six sectors are defined by GateEq, a strategic initiative of CAI, the consultancy and investment arm of the Changi Airport Group.
Developed by SGX as part of its iEdge product suite, the index aims to capture global aviation and long-term travel-related growth.
It is constructed to be tradable, with efficient liquidity and replicability. The constituents will be reviewed quarterly, using the index methodology to screen a universe of stocks researched by GateEq.
As the Covid-19 pandemic brought about an unprecedented impact on the aviation industry, the International Air Transport Association (IATA) has estimated a recovery, where passenger levels are expected to surpass that of its pre-pandemic levels by 2024.
See also: Retiring The Edge Singapore’s global portfolio
Based on the iEdge-GateEq Aviation and Travel Index, travel and aviation stocks displayed high volatility since March 2020 as countries were grappling with border closures and reopening.
The index has since reached pre-Covid-19 levels in October due to a rally in stocks related to the hospitality and travel and booking sectors.
In the meantime, airlines and air freight stocks still remain as laggards.
See also: Traders’ fear of missing out on stock gains outweighs tariff concerns
Ng Kin Yee, managing director and head of data, connectivity and indices at SGX says he is “delighted to partner CAI” on the launch of the index.
“As borders reopen and travel restrictions ease, the aviation and travel sector is one that is keenly watched by investors seeking to capture post-pandemic growth. While growth across the industry may be uneven, we hope that this index will serve as a yardstick and source of insight for investors and the wider industry, and we certainly look forward to this ongoing partnership with CAI,” Ng adds.
Eugene Gan, CEO of CAI, says, “Notwithstanding CAI having established a global footprint covering multiple airports across different regions, we believe this is the first occasion in the world where an airport group is working with a leading index market provider to provide such a unique solution for the financial market. We are excited to work with SGX in this new partnership and to launch the index at this opportune moment as borders reopen.”
As at 2.51pm, shares in SGX are trading 4 cents lower or 0.43% down at $9.25.
Photo: Bloomberg
