STOCK MARKET INDEXES : A STUDY ON THE SINGAPORE MARKET

Abstract

This study is concerned with the use of available stock market indexes as a measure of the performance of the Singapore stock market. Due to the peculiar characteristics of the Singapore stock market which includes the SES mainboard, the SESDAQ and CLOB International, none of the available indexes can be use as an accurate measure for the overall performance of the Singapore stock market. This study attempts to formulate a new index that is representative of the Singapore stock market. The new index is a broad based index which includes stocks from the three boards. The new index is computed using the value weighted methodology. Comparison of the new index to other available index focuses on whether there is any important information that is captured by the new index but not captured by other indexes. It seems that the new index does contain information that is not included in other available indexes. The secondary concern of this study is to address the inadequacy of available indexes to reflect the performance of the newly approved CPF trust funds. This study recommends the use of the new index to track the performance of such funds until a better index is introduced for this purpose.