SGX and Changi Airports tie up to create iEdge index to track travel shares

Duty Free outlet at Changi AirportDuty Free outlet at Changi Airport; photo taken pre-Covid

Singapore Exchange (SGX) and Changi Airports International (CAI) have created the iEdge GateEq Aviation and Travel Index, which is targeting tracking global aviation and travel-related long-term growth, particularly as borders reopen, the two companies said Thursday.

“This marks the first-of-its-kind collaboration between an index provider and an airport group, where deep knowledge of the aviation industry is translated into an index format,” CAI and SGX said in a joint statement filed to the exchange.

GateEq is a strategic initiative by CAI, which is the consultancy and investment arm of Changi Airport Group, the statement said.

The index will be market-capitalization weighted and will cover the top 50 listed companies globally with revenue derived by six sectors: airport infrastructure and services, airlines, original equipment manufacturer (OEM) and system providers, air freight and logistics, travel and booking services, and hospitality, the filing said. GateEq defined the categories, the statement said.

Based on the new index, travel and aviation stocks have faced high volatility since March 2020, but in October 2021, the index was at a pre-Covid level, amid a rally in hospitality, travel and booking related stocks, while airlines and air freight stocks were laggards, the filing said.

SGX and CAI noted the International Air Transport Association (IATA) has forecast global passenger numbers would surpass pre-Covid levels by 2024, depending on border reopenings and quarantine mandates.

Ng Kin Yee, managing director and head of data, connectivity and indexes and SGX said: “As borders reopen and travel restrictions ease, the aviation and travel sector is one that is keenly watched by investors seeking to capture post-pandemic growth. While growth across the industry may be uneven, we hope that this index will serve as a yardstick and source of insight for investors and the wider industry, and we certainly look forward to this ongoing partnership with CAI.”

The index’s top-10 constituents are: United Parcel Service (UPS), Booking Holdings, Airbus SE, FedEx, Deutsche Post AG, Safran SA, AirBNB, Marriott International, Southwest Airlines and Hilton Worldwide Holdings.