CHANGES TO THE DBS50 INDEX

1. DBS Bank has announced several changes to the DBS50 index constituent stocks, which will take effect after the close of trading on 31 Aug 98.
2. The following 9 stocks have been included: Natsteel Electronics, Venture Manufacturing, GP Batteries International, Labroy Marine, Electronic Resources, Avimo, Kim Eng, Comfort and Hong Leong Asia.
3. The following 9 stocks have been removed: IPC, Lum Chang, WBL, Auric Pacific, Carnaudmetalbox Asia, Metro, Isetan, Intraco and Jurong Engineering.
4. Both the foreign as well as the local tranches of SIA, DBS Bank, OCBC, UOB, SPC and Hong Leong Finance are now included in the DBS50 index.
5. The change in the DBS50 constituent stocks took into account inter alia, market capitalisation, liquidity and the need to represent a broad range of sectors. The bank had commissioned a study of the existing index methodology and selection criteria and found these to be in line with leading practice.
6. DBS Bank President Ng Kee Choe said: "We are happy that the market cap weighting method devised for the DBS50 index way back in 1989 has been independently revalidated and no major changes need to be made. Hence there is general continuity, which is important for investors. Of course, from time to time there will be changes in individual component stocks, due to price and turnover changes, and this is to be expected."
7. The review of the DBS50 index was done by Dr Tsui Kai Chong of the NUS Graduate School of Business, who was engaged as DBS' independent consultant. Dr Tsui said: "We had carefully considered weighting by free float but rejected this approach. While theoretically appealing, the true free float is a moving target. Fund managers and other sophisticated investors would want to compute indicators such as dividend yield, EPS and P/Es for the index as a whole. Adjusting all these metrics for free float consistently across all stocks would be complicated, even if timely data were available."
8. Launched in 1989, the DBS50 index serves as a barometer of the price performance of Singapore-incorporated companies listed on the SES Main Board. Being market capitalisation weighted and broad-based, it is less prone to manipulation. The DBS50 index has a historical return correlation of about 95% with the SES-All Share Index, where 100% represents perfect correlation. The DBS50 is widely followed by analysts, fund managers and other investors.

Appendix: Full list of the new DBS50 index constituent stocks

*:SingTel's market cap is multiplied by 0.4 to limit the impact of any one counter on the index.  The MSCI-S'pore index uses the same multiplier.