The Straits Times Index (SGX:^STI) ended at 3365.15 in 2014, representing a 6.2% price gain for the year. Taking the consistent flow of constituent dividends into account, and assuming that income was reinvested, the total return of the STI came to 9.5% for 2014. This means that for the past three years the annualised total return of the STI was 11.6%. In 2014, the 5 highest total returns within the STI were generated by Olam International Ltd (SGX:O32), Comfort Delgro Corporation Ltd (SGX:C52), Thai Beverage Public Company Ltd (SGX:Y92), Jardine Matheson Holdings Ltd (SGX:J36) and DBS Group Holdings Ltd (SGX:D05)….
The Straits Times Index (SGX:^STI) ended at 3365.15 in 2014, representing a 6.2% price gain for the year. Taking the consistent flow of constituent dividends into account, and assuming that income was reinvested, the total return of the STI came to 9.5% for 2014.
This means that for the past three years the annualised total return of the STI was 11.6%. In 2014, the 5 highest total returns within the STI were generated by Olam International Ltd (SGX:O32), Comfort Delgro Corporation Ltd (SGX:C52), Thai Beverage Public Company Ltd (SGX:Y92), Jardine Matheson Holdings Ltd (SGX:J36) and DBS Group Holdings Ltd (SGX:D05). 3 of these constituent stocks – Thai Beverage, Comfort Delgro, DBS Group Holdings, along with United Overseas Bank Ltd (SGX:U11) and Starhub Ltd (SGX:CC3) generated the highest annualised returns over the past 3 years.
Sector-wise, in 2014, the 4 STI constituents representing the Consumer Staples Sector averaged the same total return as the 10 STI constituents of the Financials Sector at 12.5%. This is based on the Global Industry Classification Standard (GICS®) sector categorisation which is also used to classify stocks in SGX StockFacts.
The Financials Sector is one of the broadest sectors and encompasses a wide range of financial-related services. Financials are further sub categorised into banks, real estate management & development, real estate investment trusts and diversified financial services. Of these four subcategorisations that do have some STI representation, banks faired the best in 2014 with an average total return of 17.8%.
Looking back to 2013, the Telecommunication Services Sector and the Consumer Staples Sectors averaged the highest total returns within the STI. Prior to this, in 2012, Financials and Industrials averaged the highest total returns in the STI. However, unlike 2014, where the banks averaged the strongest performance in Financials, Real Estate Management & Development stocks in the STI averaged the highest returns in 2012.
|GICS Sector with STI representation||Number of STI stocks||Average 2012 Total Return (%)||Average 2013 Total Return (%)||Average 2014 Total Return (%)|
Source: SGX My Gateway, Bloomberg
From a sum-of-the-parts perspective, different performing sectors within the STI has provided for index stability in each of the past 3 years. However when breaking up the STI’s performance over the past 3 years there have been some distinctively different sector performances. A composite of the STI Sector with the strongest average returns in 2012, 2013 and 2014 generated a total return of 71.1% over the 3 years. Meanwhile a composite of the STI Sector with the least average returns in 2012, 2013 and 2014 generated a total return of 1.0%.
Reduction in Board Lot Size on 19 Jan 2015
Effective 19 January, the reduction of board lot size to 100 units will provide investors a means for more effective sector balancing. For instance based on Friday’s prices, a Consumer Discretionary position spread over the 3 STI constituent stocks would require a minimum of S$47,100 with 88% invested on Jardine Cycle & Carriage. With the reduced board lots, an investment portfolio with 33% Jardine Cycle & Carriage, 34% Singapore Press Holdings and 33% Genting Singapore, would require a minimum of S$12,565 using Friday’s prices. This is purely an educational example and transaction costs are not taken into account. Other sectorial investments might include some form of weightage based on market capitalisation, sub-sectors or the use of another sector classification system such as the Industrial Classification Benchmark (ICB).
The table below details the STI returns for the most recent 3 years by the GICS sector level and includes the average performances of the 5 major sectors over the same timeframe.
|Name||SGX Code||MKT Cap S$bn||GICS Sector||2012 Total Return(%)||2013 Total Return(%)||2014 Total Return(%)||Annualised Total Return: 2011-2014|
|JARDINE CYCLE & CARRIAGE||C07||15.2||Consumer Discretionary||3.4||-22.7||22.0||-0.8|
|SINGAPORE PRESS HOLDINGS||T39||6.7||Consumer Discretionary||15.9||12.4||7.4||11.8|
|GENTING SINGAPORE||G13||13.1||Consumer Discretionary||-7.7||8.7||-27.2||-10.0|
|OLAM INTERNATIONAL||O32||4.9||Consumer Staples||-25.5||1.4||36.4||1.0|
|THAI BEVERAGE||Y92||17.3||Consumer Staples||68.4||41.1||31.5||46.1|
|WILMAR INTERNATIONAL||F34||20.7||Consumer Staples||-32.4||4.10||-3.1||-11.9|
|GOLDEN AGRI-RESOURCES||E5H||5.9||Consumer Staples||-5.9||-14.4||-14.9||-11.8|
|DBS GROUP HOLDINGS||D05||51.0||Financials||34.0||19.0||24.6||25.7|
|HONGKONG LAND HOLDINGS||H78||21.1||Financials||49.0||-10.6||23.6||18.1|
|UNITED OVERSEAS BANK||U11||39.3||Financials||34.0||10.8||19.5||21.0|
|OVERSEA-CHINESE BANKING CORP||O39||41.7||Financials||28.5||8.2||9.3||14.9|
|GLOBAL LOGISTIC PROPERTIES||MC0||12.0||Financials||60.5||5.4||-12.8||13.8|
|JARDINE MATHESON HLDGS||J36||55.8||Industrials||27.2||-10.8||25.2||12.4|
|HUTCHISON PORT HOLDINGS TR||NS8U||8.0||Industrials||30.1||-4.9||15.9||12.8|
|JARDINE STRATEGIC HLDGS||J37||50.8||Industrials||21.8||-6.3||13.0||8.8|
|SINGAPORE TECH ENGINEERING||S63||10.6||Industrials||49.1||7.7||-10.5||12.8|
|SIA ENGINEERING CO||S59||4.7||Industrials||34.9||20.4||-12.3||12.5|
|SINGAPORE TELECOMMUNICATIONS||Z74||62.2||Telecommunication Services||11.8||16.0||11.3||13.0|