Heritage & Highlights of the Straits Times Index

Singapore-1

The STI has generated a 14.5% YTD dividend inclusive return, with Yangzijiang Shipbuilding Holdings (which joined the STI in September 2015) the strongest of the 30 STI constituents.

The strongest STI Sector in the YTD has been Real Estate Management & Development – with Global Logistic Properties, City Developments, CapitaLand, UOL Group and Hongkong Land Holdings averaging 24.5% total returns.

STI ETF units that follow the performance of the STI, while also mirroring any changes to STI constituents, have been available to Investors over the past 15 years. Since the SPDR® STI ETF was introduced in April 2002, the STI has generated a total return close to 200%.

The Straits Times Index (STI) has been providing an on-going performance benchmark for the stock market since the beginning of 1967.  This was in the form of the Straits Times Industrials Ordinary Share Index, which then measured the price moves of industrial stocks. The Index was regularly illustrated in the Business Times which was then a Commercial and Financial Section within the Straits Times. Five years on from the base price of 100 on 30 December 1966, Singapore was well into its export promotion phase and the Straits Times Industrials Ordinary Share Index had reached 200.

The modern day form of the STI is very different to Straits Times Industrials Ordinary Share Index, which pre-dated the formation of the Stock Exchange of Singapore (SES) in 1973. However significant economic lineage remains a key strength of the STI.  The foundations of the current 30 STI stocks span as many as three centuries – from the Jardine Matheson Group in the 1880s to Hutchinson Port Holdings Trust in the 2010s. The STI also spans well-established local businesses like City Developments which listed in 1963, and key regional plays like Golden-Agri Resources, which was founded 33 years later.

STI – Free Float Diversity by Business Sectors

 

STI – Free Float Weighted Revenue Reach

 

 Chart 1  Chart 2

Source: SGX, Bloomberg, Company Annual Reports, All Sectors based on GICS ® Categorisations

Indicative Sector weightings and geographical revenue exposures of the STI are illustrated above. The geographical revenue reach of the STI exemplifies the diversified exposure of the Index that spans Singapore-focused business to the businesses that are engrained in the developing growth of Asia.

The segment of the stock market that has made the most recent impact on the STI are the Real Estate Investment Trusts (REITs) – of which three are included in the STI, with the added relevance of three REITs now a part of the five-stock STI Reserve List. As EY noted in its Global IPO Trends: Q1 2017 Report, SGX continues to be the preferred choice for REITS and business trusts, underscoring investors’ preference and appetite for yield-based products in Singapore.

The STI has also consistently maintained one of the highest dividend yields across Asia with the yield at 3.4% as of the end of April 2017. This compared to an average of 2.5% for the FTSE Indices of China, Japan, India, Hong Kong, Indonesia, Malaysia and Thailand.

STI ETFs

Another key development  for the STI over the past 15 years has been the listing of STI Exchange Traded Funds (ETFs) which have made the STI Investable. The SPDR® STI ETF listed in April 2002 and over the ensuing 15 years, the STI outpaced the region’s performance as illustrated below.

15yr % Returns (Dividend-inclusive & in SGD)

Chart 3

Source: SGX My Gateway, Bloomberg (Monthly Data from April 2002 to April 2017)

While the STI generated a 283% total return in US Dollar terms, the total dividend-inclusive return in Singapore Dollar (SGD) terms was close to 200%, at  195%.

STI ETFs that follow the performance of the STI benchmark have provided access to these returns, while also mirroring the changes to STI constituents over the years. Hence by including STI ETFs in their portfolios, investors will automatically have exposure to the 30 biggest active Singapore stocks, which can change over time.

Investors can now also choose to dollar cost average the ETFs that track the STI via Maybank Kim Eng, OCBC Bank, Phillip Capital and POSB Regular Shares Savings (RSS) Plans. Click here for more information on how investors commit fixed amount of money every month to invest in these plans.

Recent STI Constituent Changes

Since the beginning of 2010, the STI has seen 11 new inclusions. Of the 11 stocks, nine are still are part of the STI – with one of the nine, Jardine Matheson Holdings, a re-entrant. The 11 stocks have averaged 34.7% total returns from the respective announced inclusions to 12 May 2017. These were discussed in more detail a recent SGX My Gateway Report here.  As tabled below, 10 of the stocks are still listed, while CapitaMalls Asia which was included in the STI on 22 March 2010 is now a wholly owned unit of CapitaLand.

Name SGX Code Market Cap S$M Ann’ment Joining STI Date Join STI Date Price on Ann’ment $ Price Change % Total Return %
Jardine Matheson Hldgs J36 67,248 1-Sep-16 19-Sep-16 60.000 8.9 14.5
CapitaLand Commercial Trust C61U 4,826 3-Mar-16 21-Mar-16 1.415 14.8 21.8
UOL Grp U14 5,691 3-Sep-15 21-Sep-15 6.050 16.9 22.4
SATS S58 5,875 3-Sep-15 21-Sep-15 3.520 49.7 57.1
Yangzijiang Shipbuilding Hldgs BS6 4,733 3-Sep-15 21-Sep-15 1.060 16.5 22.2
Ascendas REIT A17U 7,469 27-May-14 4-Jun-14 2.388 8.5 30.9
Hutchison Port Hldgs Trust NS8U 4,905 25-Mar-13 3-Apr-13 0.840 -52.4 -24.9
Thai Beverage Y92 22,222 7-Mar-13 18-Mar-13 0.570 55.3 79.3
IHH Q0F 16,299 12-Sep-12 24-Sep-12 1.245 59.0 61.3
Global Logistic Properties MC0 13,499 10-Mar-11 21-Mar-11 1.960 46.9 62.3
CapitaMalls Asia JS8 N/A 11-Mar-10 22-Mar-10 2.340 N/A N/A
Average 22.4 34.7

Note of the 11 stocks tabled above, nine remain in the STI, with IHH Healthcare Berhad omitted in 2013 and CapitaMalls Asia becoming a wholly owned unit of CapitaLand in 2014. Source: SGX, Bloomberg & SGX StockFacts (data as of 12 May 2017).

The best performer of the STI inclusions since 2010 was Thai Beverage PCL and the least performer was Hutchison Port Trust Holdings. As discussed in the South China Morning Post in April (click here), benchmark inclusions do not necessarily coincide with positive returns.

Recent Constituent Performances 

As illustrated above the STI had generated a 195% SGD  total return over the past 15 years. The STI has also been a comparatively strong performer in the shorter term with a 14.5% SGD total return in the 2017 year through to 12 May.

In the YTD Yangzijiang Shipbuilding Holdings has been the strongest of the 30 STI constituents. The shipbuilder with an outstanding order book ranking of #1 in China and #4 in the World recently celebrated 10 years of listing on SGX. The five next best YTD STI performers consisted of four Real Estate Developers and Genting Singapore.

Share prices of Singapore-focused Real Estate Developers firmed following the Singapore Government’s 10 March 2017 announcement on the relaxation of some cooling measures in the Singapore residential market. Real Estate Developers with exposure to China have also performed comparatively well on the firmer performance of Mainland property markets. Together, Global Logistic Properties, City Developments, CapitaLand, UOL Group and Hongkong Land Holdings have averaged 26.3% YTD total returns, bringing their average five year total returns to 54.2%.

The performances of the 30 stocks are tabled below. The STI Sector which performed the strongest over the five years was the Banks with the three stocks averaging a 57.8% total return.

Name SGX Code Market Cap S$M Total Return YTD % Total Return 5 Yr % Dvd Ind Yld % GICS Sector Name
Jardine Matheson Holdings J36 67,248 16.8 70.8 2.3 Industrials
Singapore Telecommunications Z74 60,580 1.6 43.0 4.7 Telecommunication Services
DBS Group Holdings D05 52,582 21.0 76.4 2.9 Financials
Oversea-Chinese Banking Corp O39 44,125 18.3 42.5 3.4 Financials
United Overseas Bank U11 38,610 17.5 54.5 3.0 Financials
Hongkong Land Holdings H78 25,206 18.9 63.7 2.5 Real Estate
Thai Beverage PCL Y92 22,222 6.1 224.8 2.7 Consumer Staples
Wilmar International F34 23,768 5.9 1.0 1.7 Consumer Staples
Jardine Cycle & Carriage C07 18,375 12.8 19.1 2.2 Consumer Discretionary
CapitaLand C31 15,332 22.8 49.7 2.8 Real Estate
Global Logistic Properties MC0 13,499 30.9 64.4 2.1 Real Estate
Genting Singapore G13 12,987 21.0 -28.6 2.8 Consumer Discretionary
Singapore Airlines C6L 12,760 11.7 21.9 4.1 Industrials
Keppel Corp BN4 11,983 16.3 -17.1 3.0 Industrials
Singapore Technologies Engineering S63 11,688 19.2 51.2 4.0 Industrials
City Developments C09 9,620 29.2 11.9 0.8 Real Estate
Singapore Exchange S68 7,865 4.0 38.5 3.8 Financials
Ascendas REIT A17U 7,469 17.8 70.7 6.4 Real Estate
CapitaLand Mall Trust C38U 6,913 6.4 42.1 5.6 Real Estate
SATS S58 5,875 8.7 167.2 3.0 Industrials
ComfortDelGro Corp C52 5,816 11.3 115.6 3.8 Industrials
UOL Group U14 5,691 20.5 77.0 2.1 Real Estate
Sembcorp Industries U96 5,674 13.0 -20.5 2.5 Industrials
Singapore Press Holdings T39 5,405 -2.5 19.0 4.1 Consumer Discretionary
Hutchison Port Holdings Trust NS8U 4,905 -5.8 -9.7 10.7 Industrials
CapitaLand Commercial Trust C61U 4,826 13.2 64.0 5.8 Real Estate
Yangzijiang Shipbuilding Holdings BS6 4,733 51.5 44.3 3.2 Industrials
StarHub CC3 4,737 0.7 10.0 6.9 Telecommunication Services
Golden Agri-Resources E5H 4,776 -11.3 -41.5 1.7 Consumer Staples
SIA Engineering Co S59 4,401 16.6 19.7 3.3 Industrials
Average 13.8 44.9 3.6

Source: SGX, Bloomberg & SGX StockFacts (data as of 12 May 2017)


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