OREANDA-NEWS. Effective 19 January, the standard board lot size of SGX-listed stocks was changed from 1,000 units to 100 units. This has made the stocks that maintain higher share prices more accessible to investors, particularly those stocks that trade a price higher than S\$10.00. Almost a third of the Straits Time Index (STI) stocks trade at prices above S\$10.00.

With the reduction in standard board lot sizes, it is also more cost-manageable for investors to include more stocks within a sector play.  From a sector perspective, the 30 STI stocks can be further categorised into five key sectors: Telecommunication Services, Industrials, Financials, Consumer Discretionary and Consumer Staples. 

The STI’s Consumer Sectors

Over the past five years the STI stocks that represent the Consumer Staples sector averaged a 54.6% total return whilst the STI stocks that represent the Consumer Discretionary sector averaged a 52.7% total return. Performances were more different over the past year with the STI’s Consumer Staples stocks averaging an 18.9% gain and the STI’s Consumer Discretionary stocks averaging a 1.5% total return. Combined, the two sectors together averaged a 10.2% gain total return year.

Sectors

Total Return:

5 years %

Total Return:

3 Years %

Total Return:

1 Year %
Consumer Staples 54.6 26.3 18.9
Consumer Discretionary 52.7 -1.4 1.5
Average Return 53.7 12.4 10.2

Source: Bloomberg (Data as of 27 January 2015)

With the reduced standard board lot size, a stock portfolio which is half weighed to the STI’s Consumer Staple stocks and half weighed to the STI’s Consumer Discretionary would require approximately S\$25,000. This would be made up of S\$12,500 near-evenly balanced between the STI’s four Consumer Staple stocks, and S\$12,500 evenly balanced between the STI’s three consumer discretionary stocks. Please do note this is based on prices this week and does not take into account transaction fees.

Before the reduced board lot size a stock portfolio half weighed to the Consumer Staples sector and half weighed to the Consumer Discretionary sector and balanced across the relevant STI stocks of the sector would require approximately S\$250,000.

Consumer Staples

Based on this week’s prices, an investment which was close-to-evenly balanced in exposure to Golden Agri-Resources, Olam International, Thai Beverage and Wilmar International would require approximately S\$1,440. While Thai Beverage would account for 26% of the Consumer Staples portfolio, Wilmar International would account for 22%, Golden-Agri Resources would account for 24% and Olam International would account for 27%. This is illustrated in the chart below.

STI Consumer Staples Portfolio Example

The table below details the individual performances as well as an educative example on possible outlays in order to achieve balanced exposures across the four stocks .  A more perfectly balanced portfolio in the STI Consumer Staples stocks would see a 25% allocation to each stock.

Name SGX Code Mkt Cap S\$ Total Return YTD % Dvd Ind Yld % Total Return 2014 % Price S\$ Shares  to attain portfolio balance Investment Amount S\$ % of Total
GOLDEN AGRI-RESOURCES E5H 5.5 -3.5 2.1 -14.9 0.440 800 352.0 24
OLAM INT’L O32 4.8 -2.0 2.5 36.4 1.980 200 396.0 27
THAI BEVERAGE PCL Y92 18.5 8.7 2.1 31.5 0.750 500 375.0 26
WILMAR INT’L F34 20.8 -0.9 2.3 -3.1 3.210 100 321.0 22

Source: Bloomberg (Data as of 27 January 2015)

Consumer Discretionary

Based on this week’s prices, an investment which was close-to-evenly balanced in exposure to Jardine Cycle & Carriage, Singapore Press Holdings and Genting Singapore PLC would require approximately S\$12,500. This is much higher than the Consumer Staples example above, due to the trading price of Jardine Cycle & Carriage which is currently higher than S\$40.00.

With an investment of approximately S\$12,500, Jardine Cycle & Carriage would account for 34% of the portfolio, and Genting Singapore PLC would also account for 34% of the portfolio and Singapore Press Holdings would account for 32% of the portfolio. This is illustrated below.  

STI Consumer Discretionary Portfolio Example

The table below details the individual performances as well as an educative example on possible outlays in order to achieve balanced exposures across the four stocks .  

Name SGX Code Mkt Cap S\$ Px Chg Pct YTD % Total Return YTD % Dvd Ind Yld % Total Return 2014 % Price S\$ Shares  to attain portfolio balance Min. Investment Amount S\$ % of Total
GENTING SINGAPORE PLC G13 12.6 -2.3 -2.3 0.9 -27.2 1.055 4000 4,220.0 34
JARDINE CYCLE & CARRIAGE C07 14.8 -1.0 -1.0 3.2 22.0 42.170 100 4,217.0 34
SINGAPORE PRESS HOLDINGS T39 6.6 -2.9 -2.9 3.6 7.4 4.090 1000 4,090.0 33

Source: Bloomberg (Data as of 27 January 2015)