Assembling its constituents based on market-cap and liquidity makes the index much more stable and consistent, albeit at the cost of some dynamism, since it means that Singapore’s banks and government-linked companies are likely to take up most of the STI’s 30 slots.
However, this isn’t the case for the STI’s reserve list, which contains the next five highest-ranking stocks by market cap after the STI’s constituents. Stocks that make it to the reserve list will replace constituents who fail to meet the STI’s inclusion criteria. For instance, one requirement states that companies whose free float is 15% or below will be excluded from the index.
On June 4, the Singapore Exchange (SGX) announced that the reserve list had seen some changes, with former members NetLink NBN Trust and SIA Engineering being replaced by First Resources and Olam Group. These two companies will join the ranks of three existing members: Keppel REIT, Sheng Siong Group and Suntec REIT.
The STI’s constituents have remained unchanged since June 2025, when Jardine Cycle & Carriage was replaced by Keppel DC REIT, which had graduated from the reserve list. Broadly, the reserve list has seen changes every quarter since last year, while the STI may only see one member rotate out over the course of a year.
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It is worth recalling the purpose of an index. Beyond serving as a benchmark for fund managers, it also acts as a reference point for companies considering going public. A benchmark heavily weighted toward banks and REITs makes the STI less relevant to start-ups in the technology space. While a rising STI may offer some confidence to investors, it is less useful as a signal for founders during roadshows, given the composition of its constituents.
The time has come for SGX and FTSE Russell to reconsider how the STI picks its constituents. Investors can’t be faulted for thinking the STI is not a meaningful indicator when low-weight constituents such as Thai Beverage and Genting Singapore have been trading down for the past few years, while some non-constituents have been rallying. Having a new criterion based on earnings or revenue could help shake things up.
Another approach would be to strip out the REITs from the STI. This will free up eight slots and allow other companies to enter the index. Even though REITs are a popular investment among Singapore’s investors, they do not really behave like a traditional enterprise.
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At the very least, additional indices such as the iEdge Singapore Next 50, which comprises the next 50 largest stocks by market capitalisation after the STI constituents, could be created to provide more reference points. For instance, an index focused on Singapore’s technology and semiconductor companies would better reflect the market’s response to AI than the STI itself.
As the STI marks its 60th anniversary this year, it’s good to remember what came before, but it is even more important to retain a sense of imagination and chart newer possibilities for Singapore’s flagship index.
