Is Sembcorp Marine Ltd About to Claw Its Way Back into The Straits Times Index?

The Straits Times Index (SGX: ^STI), the most prominent stock market benchmark in Singapore, is made up of 30 different stocks.

Oil rig builder Sembcorp Marine Ltd (SGX: S51) was one of the 30 up till September last year when it was dropped from the index. But, the company has now made it to the reserve list of the Straits Times Index.

As a brief background, the Straits Times Index is reviewed on a quarterly basis by its co-creators to determine if any changes to its constituents should be made. The review will also see five companies be named in the reserve list. These “benchwarmers” are stocks that will step up to the plate to replace existing Straits Times Index constituents should they drop out for any reason.

As such, Sembcorp Marine could well find its way back into the fold of the Straits Times Index in the future given that it’s now one of the reserve members.

The five amigos

Here’re a few things that investors may want to know about the five benchwarmers:

  1. The previous reserve list consisted of postal and logistics services provider Singapore Post Limited  (SGX: S08), oil palm producer First Resources Ltd (SGX: EB5), the commercial properties owner Keppel REIT (SGX: K17), and the retail-focused Suntec Real Estate Investment Trust (SGX: T82U) and Mapletree Commercial Trust (SGX: N2IU).
  2. The new reserve list, which was released on 2 March 2017, has only one change: The replacement of Singapore Post with Sembcorp Marine.
  3. Sembcorp Marine’s parent company, SembCorp Industries Limited (SGX: U96), is one of the 30 companies in the Straits Times Index and has been so for a long time.
  4. As mentioned, the reserve list has three real estate investment trusts. REITs are increasingly prominent within the Straits Times Index.
  5. Keppel REIT’s parent company, Keppel Corporation Limited (SGX: BN4), is also one of the 30 stocks that make up the Straits Times Index.

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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 contributor Chin Hui Leong owns shares in Suntec REIT.