The Five Most Important Blue Chips In The Straits Times Index

The Straits Times Index (SGX: ^STI) is widely regarded as the market barometer of the Singapore stock market. So, i t might be worth taking time to understand the inner workings of the Straits Times Index.

To facilitate this study, we can take a look at this SGX report . As a note, Jardine Strategic Holdings Limited (SGX: J37) is expected to take the place of SIA Engineering Company Ltd (SGX: S59) from 18 September onwards.

With that in mind, we will be looking at the companies with the highest projected weighting in the index after Jardine Strategic Holdings makes its entry.

Here, then, are the five most influential companies:

1. The top three spots are occupied by DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corp Ltd (SGX: O39) and United Overseas Bank Ltd (SGX: U11). The banking trio has a weighting of 12.9%, 12.3% and 10.1%, respectively, making up 35.3% of the Straits Times Index.

2. Singapore Telecommunication Limited (SGX: Z74) is the next company, which is tied in third place with a weighting of 10.1%. Along with StarHub Ltd (SGX: CC3), the telecommunications sector makes up 10.6% of the Straits Times Index. StarHub is the smallest contributor to the index, accounting for 0.5% of the index.

3. In fifth place, we have Jardine Matheson Holdings Limited (SGX: J36) with a 6.3% weighting. However, Jardine Matheson Holdings holds stakes in three other Straits Times Index components, namely, Jardine Cycle & Carriage Ltd (SGX: C07), Hongkong Land Holdings Limited  (SGX: H78), and Jardine Strategic Holdings Limited (SGX: J37). Collectively, the Jardine family of companies contribute 15.5% of the index.

4. If we put the three banks and Singtel together with Jardine Matheson, the top five companies would make up 51.7% of the Straits Times Index. In other words, the top five companies have an outsized influence over the future movements of the Straits Times Index.

We have looked at the top five companies by weighting. It is worth noting that that sectors such as real estate and industrials make up 18% and 22.4% of the Straits Times Index. As such, these industries might also may hold some sway on the movements of the 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. The Motley Fool Singapore has recommended shares of Singapore Exchange, Hongkong Land Holdings, and United Overseas Bank. Motley Fool Singapore contributor Chin Hui Leong owns shares in Hongkong Land Holdings.