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The 3 Worst Performing Blue Chips on the Straits Times Index Share 1 Big Problem

Singapore’s Straits Times Index (SGX: ^STI), home to the 30 largest companies in Singapore, has fallen by over 8% since the start of the year.

Over the past three years, the index has gained a total of 9.4%, but not all stocks have managed to produce a positive return during the period. In fact, a recent SGX report revealed that the three weakest performing blue-chips have posted negative returns of almost 36% on average. Let’s take a quick look at the stocks that are holding up the rear (data as of 30 August 2018, unless otherwise stated):

1. Hutchison Port Holding Trust (SGX: NS8U) is the first and only container port business trust listed on the Singapore market. The trust is the owner of  five ports located in Hong Kong and China. Many China related stocks have suffered during the recent trade disputes between China and the US. Hutchison Port Trust is no different, over the past three years, the trust has seen its stock price slide negative returns of 46.1%. Not only has the trade dispute affected its business, the port business is also highly competitive. Shipping companies that frequent its ports are searching for better routes most the time, and many have shifted out of the Hutchison’s ports. At the moment, Hutchison has a market capitalisation of US$2.1 billion, and offers a 10.1% dividend, the highest among Singapore’s blue-chip companies. Note: the trust’s dividend has been declining over the past five years.

2. Starhub Ltd (SHX: CC3) is one of the three main telcos in Singapore. The company has disappointed  investors over the last three years, posting a negative 44.4% return. The poor performance could be attributed to the expected arrival of a fourth telco by the end of 2018. The potential arrival of the fourth telco has led to price-cutting among Singapore’s telco in a bid to gain or cement market share. The situation is made worse by recent rise of mobile virtual network operators (MVNO) which have led to increased price competition. Starhub’s market capitalisation stood at S$2.8 billion and it pays out a dividend of 9.8% at current prices. News also broke on last Thursday that the telco is on its way out of the index, to be replaced by Dairy Farm International Holdings Ltd (SGX: D05).

3. Singapore Press Holdings Limited (SGX: T39) is the third weakest performer on the STI with negative returns of over 17% over the past three years. SPH is media company with businesses in print, internet and new media, radio, outdoor media and property. The company’s traditional newspaper business is facing pressures from online news portal, causing a loss in advertising revenue. This shift in advertising spend from newspapers to online options is likely to continue. SPH has been trying to diversify its revenue base by moving into the property business, but it’s still early day for these new business segments. With its core business facing a major disruption, it’s not a surprise that the company has performed poorly over the past three years. SPH currently sports a market capitalisation of S$4.4 billion and has a dividend yield of 5.5%.

All three companies above share one problem, that is, the unfortunate trio are facing long-term challenges within their own industries. As an investor, we have to be discern whether the challenges that a company faces are temporary, or represent a unfavourable trend that is expected to stay. If the company is unable to adapt, we might face share price losses in the years to come.

To catch the best performing stocks for the STI, head here.

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The Motley Fool Singapore contributor Esjay contributed to this article. 

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 and Dairy Farm International. Motley Fool Singapore writer Chin Hui Leong owns shares of Singapore Exchange and Dairy Farm International.