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3 Things to Know about Singapore’s Stock Market Barometer

If you wish to know how the Singapore stock market is performing, you would have to turn your attention to the Straits Times Index (SGX: ^STI), or STI for short.

The STI has a history dating back to 1966, and it tracks the performance of the top 30 largest and most liquid companies listed on the Singapore Exchange Limited (SGX: S68). Furthermore, it is the main index of the FTSE ST Index Series, a family of indices created by Singapore Press Holdings Limited (SGX: T39), Singapore Exchange and FTSE Group.

Let’s take a look at three interesting aspects of the STI that you might be keen in.

1. Top 10 Constituents

The following table shows the top 10 constituents of the STI:

Source: FTSE Russell STI Factsheet (data as at 30 June 2017)

The top 10 components made up 70.23% of the total index market capitalisation, as at 30 June 2017. The top component of the STI is DBS Group Holdings Ltd (SGX: D05), contributing 13.34% to the index market capitalisation. In fact, the three local banks made up 36.52% of the index.

2. Sector Breakdown 

Source: FTSE Russell STI Factsheet (data as at 30 June 2017)

As mentioned earlier, banks make up 36.52% of the index. The next biggest sector is real estate, contributing to 18.55% of the index, followed by industrial goods and services (11.95%).

An interesting thing to note is that although real estate is the second biggest sector, STI’s fourth largest company, Singapore Telecommunications Limited (SGX: Z74), is not from that sector. As the name suggests, Singapore Telecommunications belongs to the telecommunications sector, which contributed to 10.97% of the index.

3. Investing in the STI

Investors who are interested in partaking in the performance of the STI can actually do so by investing in STI ETF (SGX: ES3), an exchange-traded fund (ETF) that tracks the performance of the STI.

By buying the ETF, investors can diversify their portfolio immediately among the 30 index components.

As of 4 August 2017, the STI ETF was trading at a price-to-earnings ratio of 12.4 and had a dividend yield of 3%.

The following table shows the annualised returns of the STI ETF, as of 30 June 2017:

Source: STI ETF Factsheet

Including dividends, the ETF has produced an annualised gain of 7.27% since inception some 15 years ago.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.The Motley Fool Singapore has recommended shares of Singapore Exchange, United Overseas Bank and HongKong Land. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.