Governance-based market indices are worth exploring

[SINGAPORE] Last month, a reader wrote to The Business Times, expressing disappointment that the two new stock market indices launched by the Singapore Exchange (SGX) used established but simple market capitalisation and liquidity criteria for inclusion, instead of employing other, more progressive considerations such as corporate governance quality or shareholder value practices.

This is an interesting and timely suggestion because several countries, including Turkey, Taiwan and South Korea, have already launched indices that track companies meeting high governance standards and/or regularly adopt practices that enhance shareholder value.

For example, in Turkey, the BIST Corporate Governance Index tracks listed companies that meet specific corporate governance standards.