S.E. Asian bourses launch stock index of region's top 40 companies

Asian Economic News, Sept 26, 2005

SINGAPORE, Sept. 21 Kyodo

Five Southeast Asian stock exchanges jointly launched a tradable benchmark stock index of the region's top 40 companies on Wednesday to woo foreign portfolio investors.

Finance ministers of the 10-member Association of Southeast Asian Nations, in London for an investors' seminar, launched the FTSE/ASEAN 40 Index comprising 40 stocks listed on the bourses of Malaysia, Indonesia, the Philippines, Singapore and Thailand, according to a joint statement issued by the five exchanges.

The ministers had agreed earlier this year to link up ASEAN stock markets by 2010.

Malaysia has the largest number of companies, 14, on the index, but in terms of market capitalization, Singapore companies have the biggest weighting at 49 percent.

The real time tradable index was launched in partnership with London-based FTSE Group. Its weighting is based market capitalization, using the U.S. dollar as the currency base. There are plans for private institutions to create tradable funds based on it and these could become available as soon as early next year.

The ASEAN stock exchanges are publicizing the index, quoted at 5,250.98, on their websites.

''This regional collaboration represents the ASEAN exchanges' efforts to promote the ASEAN financial markets,'' the statement said.

Southeast Asian stock markets are small individually, with the largest stock market in the region, Singapore, being less than 10 percent the size of Tokyo's. But when combined, they could be comparable to the markets in India and in China, officials said.

The index includes Singapore companies such as DBS Group Holdings, Southeast Asia's biggest bank and Singapore Telecommunications Ltd., one of Asia's biggest telecommunications companies. Malaysian companies such as Malayan Banking Bhd. and Tenaga Nasional Bhd., Malaysia's main energy provider, are also included.