Can Investors Still Get Big Returns From Big Companies In Singapore?

There’s a saying in the stock market that ‘Elephants can’t jump.’ It’s used to refer to the idea that companies with big market capitalisations tend not to give their investors big returns.

Is this true in Singapore’s stock market? I have data from S&P Global Market Intelligence on 707 entities with a primary listing in Singapore’s stock market. Here’s what I found:

  • Of the 707 entities, only 132 of them managed to generate a total return of at least 100% (the total return takes into account gains from reinvested dividends) in the five year period stretching from 23 December 2011 to today. This equates to a compound annual return of a very respectable 15%.
  • Of the 132 Singapore-listed companies and trusts with a five-year total return of 100% or more, only 11 of them had market capitalisations of more than S$1 billion back in 23 December 2011. Some of the 11 are Suntec Real Estate Investment Trust (SGX: T82U), ComfortDelGro Corporation Ltd (SGX: C52), and Mapletree Commercial Trust (SGX: N2IU).
  • Of the 707 entities, only 69 of them had market caps of over S$1 billion back in 23 December 2011. This means that the percentage of large companies that have doubled in value or more over the past five years is only 15.9% (11 divided by 69). But interestingly, the percentage of small companies that have doubled in value or more for the same period is only slightly higher at 19.0% (121 divided by 638).

Given the numbers we’ve seen, it appears that the odds of finding solid winners from big companies in Singapore’s market is similar to the odds of finding solid winners amongst small companies. So, it wouldn’t make sense to completely dismiss large companies if you’re looking for big returns as there are still elephants that can jump.

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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 Chong Ser Jing doesn't own shares in any company mentioned.