Merill Lynch launching the ML S-Shares Index :

The objective of the ML S-shares index is to provide exposure to stocks likely to benefit from the growth in China's economy in general and the money flow into Chinese companies listed on Singapore Exchange (S-shares) in particular.

We expect more QDII funds to be launched in the near future, which will further escalate interest in S-shares given their cheaper valuation compared to A-shares and HK-listed Chinese equities. Investors are also likely to prefer S-shares that are liquid and exhibit good growth. Jiashi is only the third QDII fund to be launched in China and we expect more to come. We have estimated that US$48bn mainland funds will flow to HK by end 08 (Please refer to David Cui's recent report "Fund QDII accelerating" for more details). Assuming 10% of the amount flows into S-shares, this would translate to US$5bn, or 10% of total Sshare market cap of ~US$50bn.

The committee is made up of relevant ML equity analysts and ML equity
derivatives strategists. The eligible universe of stocks is subsequently screened to ensure liquidity and tradability according to the following constraints:

Liquidity: 3Mth & 20D average daily turnover >US$1Mn
Market Cap: the full market cap must be at least US$100Mn
Country of listing: Singapore
Stocks are not subject to any foreign investment restrictions

Following the screening exercise, stocks will be selected to ensure the following: at least 10 stocks and at most 40 stocks will be included at any time.