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Straits Times Index (STI) Stocks: How Much Would You Have Gained (Or Lost) If You Invested In 2018

Years like 2018 is why it pays to invest in a diversified portfolio over the long term.

The Straits Times Index (STI) is made up of the 30 strongest and most liquid stocks listed in Singapore. Comprising close to 80% of the entire market value in Singapore, the returns that the stocks on the STI provides is essentially the market returns or benchmark returns.

For investors who are new or prefer taking a hands-off approach, being able to invest in the STI can be the most practical way to invest. This is primarily because it offers several advantages such as diversifying our investment portfolio with just one investment as well as receiving the market returns without requiring much knowledge or spending time monitoring and adjusting our portfolios.

Currently, there are two listed STI exchange traded funds (ETFs) – the SPDR STI ETF and the Nikko AM Singapore STI ETF – that we can invest in to gain exposure to Singapore’s stock market. Both of the ETFs aim to replicate the constituents on the STI and its returns.

Read Also: SPDR STI ETF VS Nikko AM Singapore STI ETF: What’s The Difference Between These 2 Straits Times Index ETFs Listed On The SGX?

How Did The Straits Times Index Do In 2018?

In 2018, the STI fluctuated quite widely. By April 2018, it was sitting on gains of nearly 3.0%. However, the STI turned south in the next three quarters of the year, delivering a one-year return of -12.7% by the end of 2018. This represented a decline of close to 16% from its highest point in April.

Source: Singapore Exchange (SGX)

Similar to the STI, many other major indexes around the world also ended up in the red in 2018. This included Malaysia’s KLCI, Hong Kong’s HSI, Japan’s Nikkei, the US’s S&P 500 and the UK’s FTSE 100.

No. Index Country Returns In 2018
1 Straits Times Index (STI) Singapore -12.5%
2 Kuala Lumpur Composite Index (KLCI) Malaysia -5.2%
3 Hang Seng Index (HSI) Hong Kong -15.3%
4 S&P 500 USA -7.0%
5 Financial Times Stock Exchange 100 (FTSE 100) UK -12.0%
6 Nikkei 225 Japan -14.9%

Just looking at stock price movements in the year alone isn’t sufficient either. There are real companies (30 of the strongest one in fact!) behind the STI that pay out regular dividends every year. We have to take these dividends into account when we determine the total returns we receive by investing in the STI.

According to the SGX, companies on the STI “currently average an indicative dividend yield of 3.8%”. This played a significant role in the STI generating a total return of -6.5% in 2018. On both the SPDR STI ETF and the Nikko AM Singapore STI ETF, which are the STI ETFs listed on SGX, both reported a one-year return of -6.1%.

How Did The Individual Companies On Straits Times Index Do In 2018?

As mentioned, there are 30 blue-chip companies on the Straits Times Index. Here’s a quick take on how these companies did in 2018.

Read Also: Complete Guide To Investing In The STI ETF

Companies On The STI Market Cap 2018 Total Return Indicative Dividend Yield
Jardine Matheson $69.9 Bn 19.8% 2.3%
DBS Group Holdings $60.4 Bn 1.2% 5.1%
Jardine Strategic $55.5 Bn -4.6% 0.9%
OCBC Bank $47.9 Bn -6.2% 3.5%
Singapore Telecommunications $47.8 Bn -13.2% 6.1%
United Overseas Bank $40.9 Bn -3.3% 3.9%
Hongkong Land $20.2 Bn -6.1% 3.1%
Wilmar International $19.7 Bn 4.3% 3.4%
Dairy Farm International $16.7 Bn 20.4% 2.3%
Thai Beverage $15.3 Bn -31.7% 2.7%
Jardine Cycle & Carriage $14.0 Bn -10.0% 3.4%
CapitaLand Limited $12.9 Bn -9.0% 3.9%
Genting Singapore $11.7 Bn -23.2% 3.6%
Singapore Airlines $11.2 Bn -8.2% 4.1%
ST Engineering $10.9 Bn 11.8% 4.3%
Keppel Corporation $10.7 Bn -16.4% 4.1%
CapitaLand Mall Trust $8.3 Bn 12.7% 5.0%
Ascendas REIT $8.0 Bn 0.3% 6.2%
Singapore Exchange $7.7 Bn 0.4% 4.5%
City Development $7.4 Bn -33.8% 1.0%
CapitaLand Commercial Trust $6.6 Bn -5.0% 4.8%
UOL Group Limited $5.2 Bn -28.8% 2.9%
SATS Ltd. $5.2 Bn -7.2% 3.9%
Yangzijiang Shipbuilding $4.9 Bn -11.4% 3.5%
Comfortdelgro Corporation Limited $4.7 Bn 13.7% 4.9%
Sembcorp Industries $4.5 Bn -15.0% 1.6%
Venture Corporation Limited $4.0 Bn -29.1% 5.8%
Singapore Press Holdings $3.8 Bn -6.9% 3.9%
Golden Agri-Resources $3.1 Bn -33.6% 0.5%
Hutchinson Port Holdings $2.9 Bn -34.7% 10.2%

Source: Singapore Exchange (SGX)

Obviously, some performed better and some performed worse than what the STI returned eventually. From the table above, we can see that even among blue-chip stocks in Singapore, the returns ranged quite widely between 20.4% from Dairy Farm International and -33.8% from City Developments.

One interesting point to note is that the largest capitalised companies on the STI managed to deliver significantly better total returns in 2018 compared to the smallest capitalised STI stocks.

5 Largest STI Companies 2018 Total Return 5 Smallest STI Companies 2018 Total Return
Jardine Matheson 19.8% Sembcorp Industries -15.0%
DBS Group Holdings 1.2% Venture Corporation Limited -29.1%
Jardine Strategic -4.6% Singapore Press Holdings -6.9%
OCBC Bank -6.2% Golden Agri-Resources -33.6%
Singapore Telecommunications -13.2% Hutchinson Port Holdings -34.7%

Ensure You Have A Diversified Portfolio

The wide divergence in performance from even the biggest companies in Singapore should be enough reason to ensure we have a well-diversified investment portfolio. The two STI ETFs give us this with just a single investment.

Read Also: Is Your Investment Portfolio Built To Withstand The Next Financial Crisis?

Being well-diversified is one way to ride volatility in the financial markets. Another way is to invest over a long time horizon. While the STI delivered a total return of -6.5% in 2018, its 10-year annualised total return is 9.2% per annum. The STI isn’t special, and all the major global indexes provided investors with strong 10-year annualised return.

Source: Singapore Exchange (SGX)

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