Industry Group Indices and Sectoral Indices
In addition to the SET Index, which is calculated from the prices of all common stocks on the main board, the SET also provides industry group indices and sectoral indices. Both these types of indices are calculated from the prices of the common stocks which share the same fundamentals which characterize each particular industry group and sector, respectively.
The index calculation methodology is identical to that of the SET Index, which is a market capitalization weighted index. This means the larger the capitlization of a stock the more its weighing in the index. The Industry Group and Sectoral index calculations are adjusted in line with the same factors that influence the calculation of the SET Index. These influencing factors include the shifting of a stock from one sector to another sector or the shifting of a stock from a sector in one industry group to a sector in another industry group. In addition, the base date of the Industry Group Indices is on December 31, 2003, which was when the Industry Group Indices were established and set at 100 points. Smaller capitalized shares are under-represented because both institutions and traders by their very mandate, must avoid these due to liquidity constraints. For this reason many smaller or mid cap Thai stocks may be underpriced. Smaller companies in Thailand make up over 70% of its GDP and often have higher growth rates then the averages. Yet, most trade at p/e discounts to the Thai market while often yielding considerably higher dividends. There is no Thai small cap. index to show for this.
There are eight Industry Group Indices (divided into 25 Sectoral Indices):
- Agro and Food Industry (Agribusiness, Food and Beverage)
- Consumer Products (Fashion, Home and Office Products, Personal Products and Pharmaceuticals)
- Financials (Banking, Finance and Securities, Insurance)
- Industrials (Automotive, Industrial Materials & Machinery, Packaging, Paper & Printing Materials, Petrochemicals & Chemicals)
- Property and Construction (Construction Materials, Property Development)
- Resources (Energy & Utilities, Mining)
- Services (Commerce, Health Care Services, Media & Publishing, Professional Services, Tourism and Leisure, Transportation & Logistics)
- Technology (Electronic Components, Information and Communication Technology)
Read more about this topic: Stock Exchange Of Thailand
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