When it comes to the stock market, nothing is ever permanent. Big companies fail all the time and history has proven to us time and again that you can never be too big to fail. Just ask the former shareholders of Nokia and Lehman Brothers.
Closer to home, the struggles of once popular oil and gas companies like Swiber and Ezra in recent months are a timely reminder that we can never be complacent when it comes to our investments.
To reinforce the notion that nothing is permanent, we take a journey back almost 10 years ago to look at the most popular index among Singaporeans, the Straits Times Index (STI).
History Of The Straits Times Index (STI)
Though the STI has a history dating back to 1966, it was only in January 2008 when it was revamped with the constituent stocks reduced from about 50 to 30, as we know it today.
Since it was re-launched almost a decade ago, there have been stocks such as Singtel, DBS, OCBC, UOB and Singapore Airlines, which have been a mainstay on the index since day one.
Unfortunately, not all the original STI constituent stocks have fared as well. Here are some of the stocks that were part of the “original STI” who are no longer on it, and what have happened to them since.
Once a popular stock that could count on Temasek as its largest shareholder, NOL started posting losses since 2011, before a decision was finally made to sell the struggling container shipping company to France’s CMA CGM in 2016.
The sale of the company was done at a price of $1.30 per share, which represented a premium of about 33% at that time. NOL was subsequently delisted from the SGX on 6 September 2016.
A price of $1.30 seems decent, until you consider that this was a far cry from the days when its stock were trading at about $2 or more in 2011, prior to the company going into the red from 2012 to 2015.
When the STI was first launched in January 2008, NOL share price was trading at above $3.
You can no longer buy NOL shares.
#2 COSCO Corporation
If you are an investor under the age of 30, we don’t blame you if you can’t remember the glory days of COSCO Corporation.
The company, which is in the ship repair and ship building industry, had a share price of $5.93 in January 2008. Its turnover for FY2007 was $2.26 billion with net profit of about $478 million.
Today, the company share price is trading at about $0.25 with its market capitalisation at about $560 million. Its turnover for FY2015 was $3.5 billion with a net loss of about $914 million.
Not surprisingly, it’s no longer part of the STI.
Not too long ago in 2012, Olam (which was then part of the STI) was the target of an attack by US-based short seller Muddy Water. This cause it share price to slide below $2. When Olam was first part of the original STI component in 2008, its share price was at $2.86 (Jan 4, 2008).
Though dropped from the STI in September 2015, Olam has continued to fare reasonably well and remain as one of the bigger companies on the exchange with a market capitalisation of about $5.72 billion. Compared to the past though, its trading volume these days is noticeably smaller.
#4 Noble Group
Unlike fellow commodity trader Olam, the past few years have been absolutely brutal for Noble and its shareholders.
Back in 2008, Noble was a stock that hovered at around the $2 mark. From between 2009 to 2014, share prices fell to the $1 – $2 mark. 2015 saw it going below the support level of $1, and since then, the company has continued declining.
It hit a low of $0.12 earlier this month before doing a share consolidation of 10 to 1, which should have prop its share price back to $1.20. However, the spectacular decline has continued with its current share price at about $0.35 (after consolidation), or $0.035 if it had not consolidated. Its market capitalisation is now at about $464 million.
A $20,000 investment in Noble back in 2012 at an average entry price of $1.50 would now be worth about $466.
If there is a lesson to be learnt, it’s that investors should avoid stocks they don’t understand, even if they are on the STI. Or at the very least, invest in them through a diversified approach such as the STI ETF.
Even people who don’t invest in stocks will know about F&N, thanks to their beverage business. Aside from that however, many people may not be aware with other businesses the group have, or more accurately, used to have.
Back in 2008 when F&N was listed on the STI, the company own Asia Pacific Breweries (think of Tiger Beer), Times Publishing (think of the Times Bookstore) and Frasers Centrepoint Limited (think of Causeway Point, Centrepoint) making it more of a conglomerate than a mere beverage company. It’s share price then was $5.50 (Jan 11, 2008).
The company starting divesting its business in 2012 when it first sold its entire stake in Asia Pacific Breweries for about $6.3 billion to Heineken. It also subsequently de-merged its property business by listing Frasers Centrepoint Limited on the Exchange separately. This resulted with their stock price and market capitalisation declining in tandem.
Unlike the other companies listed above, F&N shareholders would have many things to cheer for since 2008. The biggest of them all was when it was the subject of a takeover that saw its share price pushed up to more than $9.
F&N was removed from the STI in 2013 due to the uncertainty over the company’s future listing status, not because of poor performance. Its share price today is $2.38.
What Other Former STI Stocks Should Be On Our List?
What are some other former STI stocks that you think we may have missed out on? Discuss it with us on Facebook and let us know why you think they should be on our list.