15 May 2017
Heritage & Highlights of the Straits Times Index
  • 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

 

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)

 

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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