STI’s Internationality in Revenue Reach & Benchmarked Performance

My Gateway (92 x 92)In the first seven months of 2014, the Straits Times Index (SGX:^STI) generated a total return of 8.3%, compared to a 1.2% total return for the Dow Jones Index and a 3.2% decline for the Nikkei 225 Index.

The STI has maintained a stronger performance than the Dow Jones Industrial Average and the Nikkei 225 over the past 10 years. As of Thursday 31 July, the STI had generated a price gain of 84% over the preceding 10 years versus 63% for the Dow Jones and 38% for the Nikkei 225.

When taking SGD appreciation into account, which was 37% to the US Dollar and 27% to the Japanese Yen, the 10 year returns of the Dow Jones and Nikkei 225 were trimmed significantly to Singapore investors. Adjusting to take into account the SGD appreciation, the Dow Jones gain was 18% and the Nikkei 225 gain was 8% over the ten year period.

For investors who had exposure to the STI over the 10 years, the 84% was the price alone performance. Exchange Traded Funds (ETFs), which can provide the benefits of an index in a single security, also track the STI and pay the STI’s dividends. One of these ETFs has been trading since 2002 and generated a total return of 140% over the past 10 years. According to Bloomberg – this return which took into account reinvested dividends – amounted to a 9.2% annualised return over the 10 years.

Investing in international stocks typically serves investors that seek to diversify their portfolio because of potential economic and valuation differences of companies abroad. The performance of the international based stock in the portfolio can be helped if the international currency appreciated to the at-home currency as well. However the reverse can also eventuate, as noted above, where the international currency depreciates to the at-home currency.

Much of the social and economic internationality of Singapore resonates into its stock market. A unique regional attribute of the STI is that the majority of its constituents have significant international revenue reach. As detailed in the table below, Asia Pacific is a key focus of all 30 stocks, with all stocks having exposure to the region.


Name SGX Code MKT Cap S$M Asia Pacific Geo Seg Rev or Net Rev %:Y EMEA – Europe, Middle East, Africa Geo Seg Rev %:Y The Americas Geo Seg Rev %:Y Total Return YTD
JARDINE MATHESON HLDGS LTD J36      50,625 93.8 5.6 13.4
JARDINE STRATEGIC HLDGS LTD J37      49,653 98.9 0.3 10.3
DBS GROUP HOLDINGS LTD D05      45,043 96.6 9.0
UNITED OVERSEAS BANK LTD U11      37,118 94.0 12.0
OVERSEA-CHINESE BANKING CORP O39      34,648 98.5 -1.0
WILMAR INTERNATIONAL LTD F34      20,861 78.7 11.3 -3.1
HONGKONG LAND HOLDINGS LTD H78      20,324 100.0 18.3
KEPPEL CORP LTD BN4      19,694 84.4 10.8 0.7
JARDINE CYCLE & CARRIAGE LTD C07      16,469 100.0 32.0
GENTING SINGAPORE PLC G13      16,346 100.0 -10.0
THAI BEVERAGE PCL Y92      15,443 100.0 16.2
CAPITALAND LTD C31      14,606 94.4 16.1
GLOBAL LOGISTIC PROPERTIES L MC0      13,545 98.8 1.2 -1.5
SINGAPORE TECH ENGINEERING S63      11,821 58.3 6.3 25.7 -1.3
SINGAPORE AIRLINES LTD C6L      11,742 71.9 20.1 7.9 -0.5
SEMBCORP INDUSTRIES LTD U96        9,775 57.8 23.1 13.3 2.8
NOBLE GROUP LTD N21        9,482 23.1 16.0 60.8 33.0
CITY DEVELOPMENTS LTD C09        9,448 58.0 9.7 14.1 9.0
SEMBCORP MARINE LTD S51        8,544 30.5 33.3 26.0 -6.3
HUTCHISON PORT HOLDINGS TR-U NS8U        7,764 100.0 13.0
SINGAPORE EXCHANGE LTD S68        7,671 100.0 -0.1
STARHUB LTD CC3        7,276 100.0 0.8
GOLDEN AGRI-RESOURCES LTD E5H        6,868 83.9 13.8 -1.0
CAPITAMALL TRUST C38U        6,818 100.0 7.7
SINGAPORE PRESS HOLDINGS LTD T39        6,622 96.6 2.2
OLAM INTERNATIONAL LTD O32        6,002 40.8 43.9 15.3 60.3
ASCENDAS REAL ESTATE INV TRT A17U        5,553 100.0 8.4
COMFORTDELGRO CORP LTD C52        5,470 78.6 21.4 29.8
SIA ENGINEERING CO LTD S59        5,234 100.0 -4.4

Source: Bloomberg (data as of 1 August 2014)

Of the 11 stocks that reported all of their revenue to Asia Pacific in the last financial year, seven reported some revenue outside of Singapore. Also please note that while revenue can be reported in Singapore, the end customer, on an individual or wholesale basis, could be elsewhere in the world.

Many of the 30 STI stocks have also helped provide Singapore’s links to the world, for instance – the first circulation of the Straits Times Newspaper dates back to 1845, Keppel Harbour’s first dry dock was built in 1859 and Singtel’s heritage dates back to a service of fifty lines in a telephone exchange in 1879.

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