News out last night that the SGX, SPH, and the FTSE Group would make some changes to the STI made me jump for joy.

For far too long I've thought the STI was lethargic in its movements and many stocks that were included in it, shouldn't be there. Seems they finally started to see the light on this.

For more in-depth details on the story you can get the full read from our website, written by my colleague Nurwidya.

But to save you from hitting the back button and browsing around, here are the quick-hits on the changes to come:

1.The number of constituent stocks will be reduced from 50 to 30. This will make the STI a high liquid index.

2.The STI will be calculated by the FTSE, in accordance with the method for liquidity criteria and free-float adjustments.

This move is done to aid investors in tracking the movements in the different sectors allowing them to make more informed decisions.

Today, there was also news out on the stocks that may (emphasis on may as there is no definitive decision yet) be dropped from the STI all together: the unlucky bunch includes some big name companies such Creative Technology, Mobile One, and the Jardine Group's stocks. These stocks have a high market cap, but low daily trade volume.

It's the right move I think, and one long overdue, that they are making with the STI. Seeing the result of plugging in new stocks and taking lethargic ones out could have a very interesting impact on not only what the index does on a day-to-day basis, but how it is viewed, and, how it drives trade.

Globally, more attention could be paid to the Singapore market, and, it could give the index more credibility. So, on the whole, I think this is the right move and, hey, better late than never right?

As always, please see your licensed financial advisor before making any investment decisions.

Curtis Bergh

Labels: makeover, STI, stocks