I’m often asked whether it is sufficient for a Singapore-based investor to hold the STI instead of the world portfolio. After all, the reasoning goes, “the biggest SGX-listed companies have extensive businesses all over the world”.

My response is two-fold. First, many investors may not know that although there are 30 stocks in the STI, six of these 30 firms account for more than half the index’s market capitalization. These six companies are: Jardine Strategic, Jardine Matheson, Singapore Telecoms, and the three local banks. It is true that these firms do have meaningful businesses outside Singapore. Nonetheless, these businesses do not span the globe. The two Jardines for example are anchored in Greater China. So is the overseas business of DBS, Singapore’s largest bank. Even if you include other big firms like Keppel Corp, Sembawang Corp and SIA, you don’t get a globe’s eye view of businesses as far as …