How has STI fared against major US indices in the past year?

Updated: May 1

2019 is about to come to an end. For most investors, it's the time of the year where we do an annual review on our investment portfolio performances and gauge if it has been a good or bad year financially.


There is no shortage of turmoils in the world events this year. US and China trade war, HK protest, Brexit, Japan-Korea tensions, just to name a few. No doubt these world events do have an impact on the stock market performances. Despite no shortage of negative news this year, all the major US indices perform relatively well this year. This is actually quite a stark contrast to the performance in 2018 where US stocks has the worst year in a decade as the S&P 500 falls more than 6% in a year.


So exactly how well have the major US indices perform this year? And also, how has our own STI fare against these major US indices in the past year?


Taking data from Yahoo Finance, I begin to export all the pricing data for STI, DJIA, NASDAQ and S&P500 for the past year (starting from 24 Dec 2018 to 24 Dec 2019).


Plotting these pricing data against time, this is what we have.

What's interesting are the r coefficient values for the respective different plots.


STI plot- 0.0920

DJIA plot- 0.831

NASDAQ plot- 0.857

S&P500 plot- 0.889


r coefficient is used to explain the strength of the linear relationship between 2 variables. Since we are plotting the index values against time, a higher r coefficient means that index perform better with respect to time. And from these r values, you can see that these 4 indices could be ranked as such in terms of performance in the past year (1- S&P500, 2- NASDAQ, 3- DJIA, 4- STI).


I think what's most surprising is the lacklustre performance of the STI. Its performance is almost flat (or even negative) for the past year! While the investors who bought into US market are busy laughing their way to the bank, investors who bought STI index are barely seeing their investments grow! If your portfolio comprises of just the STI index, your investment this year is almost stagnant, barring the few dividends you might get to help you fight inflation.


To put things into perspective, here are what you get today (excluding dividends) if you invest 1000 SGD into each of the ETFs for the individual indices on 24 Dec 2018


STI- 1057 SGD

DJIA- 1288 SGD (taking into account exchange rate effects)

NASDAQ- 1454 SGD (taking into account exchange rate effects)*

S&P500- 1350 SGD (taking into account exchange rate effects)


*The ETF used in this case is the commonly invested Powershares QQQ ETF which tracks the performance of the largest 100 firms in NASDAQ instead of the over 3000 firms in NASDAQ. Hence, it might not be a true representative of the whole performance of NASDAQ.


You could see that you get a much much better return if you have invested in US indices this year!

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STI really do have subpar performance as compared to the US indices this year. Since the country's stock index is a major representative of the performance of the various different listed companies in the country, this goes to show that most of Singapore listed companies are not having a good year this year...


Hence...


Brace yourself, fellow Singaporeans!

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©2019 by datascienceinvestor