Should the STI represent the economy or the market?

THERE have been calls lately to revamp the Straits Times Index to include more growth sectors instead of the current emphasis on property and banks. These calls came after plans to overhaul Hong Kong's Hang Seng Index were announced earlier this month, that include increasing the number of constituents from 52 to 80, limiting a stock's weighting to 8 per cent and increasing sector representation.

As a result, industry players here have said there is scope for the STI to follow suit and include new economy sectors such as e-commerce, technology, healthcare, logistics and consumer services.

This view has merit, especially with the growth in popularity of passive investing and the rise of the exchange-traded fund industry. However, it raises an age-old question that was first debated 23 years ago in 1998 when the STI underwent a major revamp - should the index represent the market or the economy?