Let’s Welcome the Straits Times Index Back To 2011

The Straits Times Index (SGX: ^STI) has fallen by close to 2% to less than 2,700 points as of the time of writing (2pm). This is a level that was last seen in 2011.

Since hitting a recent peak of 3,550 in mid-April 2015, Singapore’s market benchmark has erased its gains over the past few years since 2011 in less than eight months.

What has changed over the years or has time stood still for all the major businesses in Singapore since 2011?

The telecommunications behemoth

The largest company in the Straits Times Index is Singapore Telecommunications Limited (SGX: Z74). Time might have indeed stood still for the company, which is also the largest telco in Singapore.

In its fiscal year ended 31 March 2011 (FY2011), SingTel recorded revenue of S$18.1 billion and net income of S$3.8 billion. In the 12 months ended 30 September 2015, SingTel’s revenue had actually slipped to S$17.2 billion while its net profit had inched up only slightly to S$3.9 billion.

In SingTel’s annual report for FY2011, managment acknowledged that threats from newer technologies might post significant challenges to the company’s business model. Back then, SingTel was already seeing device manufacturers and internet companies trying to replace telcos by developing a direct connection to their customers.

Thus, SingTel had been urgently trying to transform its business, such as by adopting new technology and even setting up a new business segment, Group Digital Life,  which focuses on business opportunities in the digital sphere.

But, will the company be successful in transforming its business model for the future? Only time will tell.

The banking giant

DBS Group Holdings Ltd (SGX: D05) is the largest financial institution from Singapore.

The bank has seen its share price fall to S$15.38 currently, meaning that its shares have done essentially nothing since the start of 2011. But, its business has grown these past few years as you can see in the table below:

DBS business changes
Source: S&P Capital IQ

Yet, given the current concern over the future of Singapore’s economy and DBS’s non-performing loans, the bank has seen its valuation fall from about 1.3 times book value at the beginning of 2011 to less than 1 currently.

With DBS, investors may want to ask if the concerns over its asset quality and its future growth prospects are justified.

Foolish Summary

Although the Straits Times Index has fallen back to where it was in 2011, some companies within the index have actually seen their businesses grow. Time hasn’t stood still for them and these companies may thus make for interesting candidates for further research.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned above.