Five Year Price Returns of STI stocks

My Gateway (92 x 92)Made up of 30 blue chip stocks, the Straits Times Index (STI) (SGX: ^STI)  has gained 54.7% over the past five years. Annualised, this equates to an average yearly price return of 9.1%.

This does not mean 9.1% was achieved each and every 12 month period dating back to the second week of October 2008. Rather, this was the steady long term annual growth rate that took into account all of the ups and downs of the five year period.

Going back further to take more ups and downs into account, the 10 year annualised price return of the STI was 6.1%.

Investors generally invest for two reasons. Firstly, they attempt to capture price returns, which are reflected in the rise of the market price of the specific share upon closing the investment position. Secondly, they benefit from the potential earnings that are periodically paid out to shareholders, otherwise known as dividend returns.

If price returns are an objective, an investor can choose to invest in blue chip stocks, which are stocks of well-established companies with stable cash flows and strong management teams, as outlined in the SIAS Investment Guide Book. Otherwise, the investor can also consider growth stocks, which are stocks of rapidly growing firms. Such firms typically plough back their earnings into the business, and their shares hence tend to experience more price fluctuations.

Some investors might not believe in adopting a long-term strategy with Singapore stocks, because they believe there may be limited price appreciation over time compared to other assets.  Yet, if one were to look at the current STI stocks that have been listed for at least five years, it is clear that many of these stocks have steadily outperformed other asset classes like term deposits with fixed interest rates.

Ninety percent of the current 30 blue chip stocks that make up the STI were listed five years ago. Five year price moves of these 27 stocks have ranged from -5% for Singapore Airlines to +270% for Genting. The median five year gain of the 27 stocks was 68% which was achieved by Noble Group.

The 27 STI stocks that have been listed for at least five years are detailed in the table.

Short   Name SGX   Code ICB   Sector Name Px   Chg Pct: Five Years Px   Chg Pct:Five Years Annualised Px   Chg Pct: 10 Years Px   Chg Pct: 10 years annualised
SINGAPORE   AIRLIN C6L Travel   & Leisure -5.41 -1.11 -3.74 -0.38
OLAM   INTERNATION O32 Food   Producers 4.20 0.82
SINGAP   PRESS HLG T39 Media 7.24 1.41 2.22 0.22
COMFORTDELGRO   CO C52 Travel   & Leisure 26.16 4.75 152.32 9.69
DBS GROUP   HLDGS D05 Banks 26.38 4.79 31.64 2.79
CAPITAMALL   TRUST C38U Real   Estate Investment Trusts 28.48 5.14 86.53 6.43
SINGAPORE   TELECO Z74 Mobile   Telecommunications 29.31 5.27 78.81 5.98
SINGAPORE   EXCH S68 Financial   Services 32.41 5.77 286.56 14.47
UNITED   OVERSEAS U11 Banks 33.42 5.93 49.99 4.13
CITY   DEVELOPS C09 Real   Estate Investment & Services 49.40 8.36 71.44 5.54
CAPITALAND   LTD C31 Real   Estate Investment & Services 53.37 8.93 162.18 10.11
SINGAP   TECH ENG S63 Aerospace   & Defense 53.93 9.00 102.46 7.30
OCBC BANK O39 Banks 62.88 10.24 108.82 7.64
NOBLE   GROUP LTD N21 General   Industrials 67.72 10.89 211.71 12.03
WILMAR   INTERNATI F34 Food   Producers 77.78 12.19 300.00 14.86
HONGKONG   LAND H78 Real   Estate Investment & Services 103.89 15.30 181.80 10.91
STARHUB   LTD CC3 Mobile   Telecommunications 105.66 15.50
SEMBCORP   INDUS U96 Oil   Equipment, Services & Distribution 110.40 16.03 260.91 13.69
JARDINE   MATHESON J36 General   Industrials 112.98 16.31 436.32 18.28
SEMBCORP   MARINE S51 Oil   Equipment, Services & Distribution 116.75 16.72 509.81 19.81
SIA   ENGINEERING S59 Industrial   Transportation 126.03 17.70 152.55 9.70
GOLDEN   AGRI-RESO E5H Food   Producers 128.68 17.98 677.51 22.75
THAI   BEVERAGE Y92 Beverages 135.56 18.68
KEPPEL   CORP LTD BN4 Oil   Equipment, Services & Distribution 136.86 18.81 327.56 15.63
JARDINE   STRAT J37 General   Industrials 139.61 19.09 605.67 21.57
JARDINE   CYCLE & C07 General   Retailers 196.25 24.25 586.90 21.24
GENTING   SINGAPOR G13 Travel   & Leisure 270.90 29.95 472.57 19.05

Source: Bloomberg (data as of 8 October 2013), SGX My Gateway

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