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STI Quarterly Sector Highlights: Financials gain 5% in QTD

As the year-end approaches, the quarter-to-date performances of the sectors relevant to the stocks of the Straits Times Index (SGX:^STI) were very different to the same quarter last year. In the quarter-to-date, the FTSE ST Financials Index was the strongest of the FTSE ST Sector Indices relevant to the STI. Meanwhile, with the fall in oil prices, the FTSE ST Oil & Gas Index was the least performing of these relevant sector indices. This is a contrast to the fourth quarter of 2013, which saw the Oil & Gas Sector the strongest of the relevant sectors.

The 30 constituents of the STI share representation from as many as eight of the core FTSE ST sector Indices. These sector indices are grouped by Industry Classification Benchmark (ICB) categorisations. In the case of the large Financial Industry Index, two sub-indices: the ST Real Estate Development & Holding Index and the ST Real Estate Investment Trust (REIT) Index are also used. The quarterly performances of these FTSE ST sector Indices, in addition to the STI are illustrated in the chart below.

4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q (exluding Dec) 2014
RE D & H
13.51%
Telco
9.39%
Telco
3.98%
Oil & Gas
2.59%
Oil & Gas
6.35%
Cons Goods
8.85%
REITs
6.45%
Financial
1.83%
Financial
4.97%
Financial
6.26%
Cons Services
6.84%
Oil & Gas
-4.65%
Cons Services
2.14%
Cons Goods
2.89%
Industrials
7.28%
RE D & H
5.27%
Cons Goods
1.80%
REITS
3.73%
Industrials
5.14%
Industrials
6.45%
STI
-4.77%
Financial
1.85%
STI
-0.01%
REITs
0.87%
Telco
4.90%
STI
0.65%
Cons Services
2.66%
REITs
4.81%
REITs
5.10%
Cons Goods
-5.28%
Industrials
1.03%
Cons Services
-0.58%
STI
0.67%
Cons Services
4.70%
Industrials
-0.26%
Telco
2.45%
STI
3.49%
Financial
4.47%
Financial
-5.84%
STI
0.55%
Financial
-1.25%
Telco
-0.22%
Financial
4.13%
RE D & H
-0.46%
STI
2.25%
Telco
2.86%
STI
4.45%
RE D & H
-5.93%
RE D & H
-0.39%
Telco
-1.68%
Cons Services
-0.32%
STI
2.10%
Telco
-1.20%
Industrials
1.56%
Cons Services
0.96%
Oil & Gas
1.35%
Industrials
-6.11%
Telco
-0.44%
REITs
-2.38%
RE D & H
-0.71%
Industrials
1.02%
REITs
-2.17%
RE D & H
1.48%
Cons Goods
-1.56%
Cons Goods
0.74%
REITs
-8.79%
REITs
-2.68%
RE D & H
-3.44%
Financial
-1.90%
Oil & Gas
-0.84%
Oil & Gas
-3.63%
Cons Goods
-7.08%
Oil & Gas
-4.39%
RE D & H
-0.27%
Cons Services
-9.13%
Cons Goods
-3.19%
Industrials
-8.17%
Oil & Gas
-3.69%
Cons Goods
-1.97%
Cons Services
-5.34%
Oil & Gas
-16.00%

Source: SGX My Gateway, Bloomberg

As shown in the chart above, the best performing sector in the preceding September quarter was also Financials with a 1.8% price return. During the June quarter, REITs were the strongest performing and during the preceding March quarter, the Consumer Goods sector was the strongest performer.  Please do note the past quarterly performances are excluding dividends. Hence for the second quarter of 2013, the FTSE ST REIT Index (SGX:FSTAS8670) gained 6.5% in price, while the dividends boost that return to 7.9%.

The FTSE ST Indices are not just made up of STI stocks, they also includes stocks of the FTSE ST Mid Cap Index and the FTSE ST Small Cap Index. However, the above indices all have STI representation hence the mutual STI constituents have had the most impact on the performance of the Sector Index. The breakdown of STI stocks by sector indices is detailed in the table below.

 

Name SGX Code Market Cap: S$B Relevant FTSE ST Industry Index Px Chg Pct YTD % Dvd Ind Yld %
GOLDEN AGRI-RESOURCES E5H 6.0 Consumer Goods -15.6 2.0
OLAM INTERNATIONAL O32 5.2 Consumer Goods 40.7 2.3
THAI BEVERAGE PCL Y92 16.4 Consumer Goods 21.3 2.4
WILMAR INTERNATIONAL F34 20.7 Consumer Goods -6.1 2.3
COMFORTDELGRO CORP C52 5.5 Consumer Services 29.4 3.0
GENTING SINGAPORE PLC G13 13.9 Consumer Services -23.7 0.9
JARDINE CYCLE & CARRIAGE C07 15.0 Consumer Services 18.5 3.2
SINGAPORE AIRLINES C6L 12.3 Consumer Services 3.6 1.5
SINGAPORE PRESS HOLDINGS T39 6.8 Consumer Services 4.1 3.5
ASCENDAS REAL ESTATE INV TRT A17U 5.6 Financials – REIT 6.4 6.2
CAPITALAND C31 14.1 Financials – RE D & H 9.6 2.4
CAPITAMALL TRUST C38U 6.8 Financials – REIT 3.9 5.5
CITY DEVELOPMENTS C09 9.0 Financials – RE D & H 4.8 0.8
DBS GROUP HOLDINGS D05 48.7 Financials – Banks 16.0 2.9
GLOBAL LOGISTIC PROPERTIES L MC0 12.8 Financials – RE D & H -9.3 1.7
HONGKONG LAND HOLDINGS H78 21.0 Financials – RE D & H 21.2 2.6
OVERSEA-CHINESE BANKING CORP O39 41.8 Financials – Banks 5.7 3.2
SINGAPORE EXCHANGE S68 7.8 Financials – Div Services 0.8 3.8
UNITED OVERSEAS BANK U11 38.2 Financials – Banks 13.0 2.9
HUTCHISON PORT HOLDINGS TR-U NS8U 7.8 Industrials 4.8 7.0
JARDINE MATHESON HLDGS J36 55.6 Industrials 22.9 2.3
JARDINE STRATEGIC HLDGS J37 52.1 Industrials 18.1 0.7
NOBLE GROUP N21 8.2 Industrials 14.5 0.9
SIA ENGINEERING CO S59 4.7 Industrials -18.8 4.6
SINGAPORE TECH ENGINEERING S63 10.5 Industrials -14.9 2.4
KEPPEL CORP BN4 16.7 Oil & Gas -19.6 4.7
SEMBCORP INDUSTRIES U96 8.3 Oil & Gas -16.8 1.1
SEMBCORP MARINE S51 6.9 Oil & Gas -29.7 3.5
SINGAPORE TELECOMMUNICATIONS Z74 62.2 Telecommunications 6.6 4.3
STARHUB CC3 7.1 Telecommunications -3.5 4.8

Source: Bloomberg (data as of 28 November 2014)

Differentiation among stocks is important for a stock market as it can provide for diversified returns.  Passive investors may not wish to concentrate their shareholdings in one particular type of stock or sector, but spread the portfolio over many stocks or sectors. At the same time, more active investors who monitor the markets with consistency might choose to rebalance their portfolios on an annual, semi-annual or quarterly basis.  This rebalancing could involve strategic decisions on the potential performance of a sector.

investors will generally have a higher level of risk tolerance than passive investors.  A composite of each of the least performing STI sectors over the last three quarters generated an 11.0% decline, while the STI gained 3.5% in price. On the other side of the coin, a composite of each of the best performing STI sectors over the last three quarters generated a 17.1% price return.

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