OREANDA-NEWS. September 10, 2015. The STI has generated annualised dividend-inclusive gains of 5.8% over the 10 years ending 4 September 2015. This compared to 5.4% for the Dow Jones Industrial Average, 5.0% for the Hang Seng Index, 2.7% for the Nikkei 225 and 1.8% for the FTSE 100 Index. These international index returns take into account Singapore Dollar appreciation over the 10 year period.

Last week, Singapore Press Holdings, Singapore Exchange (SGX) and FTSE Russell announced that UOL Group, Yangzijiang Shipbuilding Holdings and SATS will replace Jardine Matheson Holdings, Jardine Strategic Holdings and Olam International as constituents of the Straits Times Index (STI) following the conclusion of the semi-annual review. In response to market demand, a recent market consultation showed strong support for the introduction of an enhanced liquidity rule for the STI beginning with this review. An information sheet on the enhanced liquidity rule can be found here.

The STI is a free float adjusted market capitalisation weighted index representing the performance of the largest Singapore blue chip stocks which pass the size, free float, and liquidity screens. The index represents approximately 60% of the ST Mainboard and as at the end of August there were 30 constituents in the index.

Based on index weights at the end of June, which are published quarterly by FTSE Russell, Jardine Matheson Holdings, Jardine Strategic Holdings and Olam International hade made up approximately 10% of the STI weights. Meanwhile, based on free floats for the same period, UOL Group, Yangzijiang Shipbuilding Holdings and SATS will each average approximately 1% in STI Index weight. The indicative weights are tabled below.

Constituent Name SGX Code GICS ® Sector STI Weight on 30 June 2015 30 June Weight with 3 changes Weight Change
DBS Group Holdings D05 Banks 12.90% 13.80% 1.00%
Oversea-Chinese Banking O39 Banks 11.20% 12.00% 0.80%
Singapore Telecommunications Z74 Telecommunication Services 10.80% 11.60% 0.80%
United Overseas Bank U11 Banks 9.70% 10.40% 0.70%
Hongkong Land Holdings H78 Real Estate 4.50% 4.90% 0.30%
Keppel Corp BN4 Industrials 4.10% 4.40% 0.30%
CapitaLand C31 Real Estate 3.10% 3.30% 0.20%
Thai Beverage Y92 Consumer Staples or Consumer Discretionary 2.60% 2.80% 0.20%
Global Logistic Properties MC0 Real Estate 2.70% 2.90% 0.20%
Singapore Press Holdings T39 Consumer Staples or Consumer Discretionary 2.30% 2.40% 0.20%
Singapore Exchange S68 Div. Fin. 2.30% 2.40% 0.20%
Wilmar International F34 Consumer Staples or Consumer Discretionary 2.40% 2.60% 0.20%
ComfortDelGro C52 Industrials 2.20% 2.40% 0.20%
Singapore Airlines C6L Industrials 1.90% 2.00% 0.10%
City Developments C09 Real Estate 2.00% 2.20% 0.20%
CapitaLand Mall Trust C38U Real Estate 2.00% 2.10% 0.10%
Singapore Technologies Eng. S63 Industrials 1.80% 1.90% 0.10%
Genting Singapore G13 Consumer Staples or Consumer Discretionary 1.90% 2.00% 0.10%
Ascendas REIT A17U Real Estate 1.70% 1.80% 0.10%
Hutchison Port Holdings Trust NS8U Industrials 1.50% 1.60% 0.10%
Jardine Cycle & Carriage C07 Consumer Staples or Consumer Discretionary 1.30% 1.40% 0.10%
SembCorp Industries U96 Industrials 1.20% 1.30% 0.10%
UOL Group U14 Real Estate   1.20% 1.20%
SATS S58 Industrials   0.90% 0.90%
Noble Group N21 Industrials 1.20% 1.30% 0.10%
Yangzijiang Shipbuilding Hldgs BS6 Industrials   1.10% 1.10%
StarHub CC3 Telecommunication Services 0.80% 0.90% 0.10%
Sembcorp Marine S51 Industrials 0.80% 0.90% 0.10%
Golden Agri-Resources E5H Consumer Staples or Consumer Discretionary 0.90% 1.00% 0.10%
SIA Engineering S59 Industrials 0.30% 0.30% 0.00%
Olam International O32 Consumer Staples or Consumer Discretionary 0.30% 0.00% -0.30%
Jardine Strategic Holdings J37 Industrials 3.20% 0.00% -3.20%
Jardine Matheson Holdings J36 Industrials 6.50% 0.00% -6.50%

Source: FTSE Russell, please note these weights are indicative only, can include rounding error and based on 30 June weights. Weights change daily and will be different on 21 Sep.

Sector Changes

Based on past weightings & free floats – had the new look of the STI been effective at the end of June 2015 – approximate sector weights would have been as follows:

§  Banks would increase its sector weight from 33.8% to 36.3%.

§  Real Estate would increase its sector weight from 16.0% to 18.4%.

§  Telcos would increase its sector weight from 11.6% to 12.4%.

§  Consumers would increase its sector weight from 11.7% to 12.3%.

§  Industrials would decrease its sector weight from 24.8% to 18.2%.

Please do note these weights are indicative only, can include rounding error and are based on 30 June weights. Weights change daily and will be different on the open of 21 September.

New STI Reserve List

The STI reserve list, comprising the five highest ranking non-constituents of the STI by market capitalisation, will be (in order of size) CapitaLand Commercial Trust, Singapore Post Ltd, Suntec REIT, Keppel REIT and M1.  Stocks on the reserve list will replace any constituents that become ineligible as a result of corporate actions, before the next review.

New Liquidity Rule

Under the new rule, securities must turnover at least 0.10% of their shares in issue (after the application of any investability weightings) based on their median daily trade per month in ten of the twelve months prior to the March or September review. For existing constituents, securities must trade at least 0.08% of its shares in issue in eight of the twelve months. As noted above, more information can be found here.