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…
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|
|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|
|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|
|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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