STI Overview (Visualisation)
Updated: Sep 25, 2020
The Straits Times Index (STI) is probably an index which is very familiar to most investors in Singapore. For many, investing in STI probably marks the first foray (or even a rite of passage) into the investing world for most Singaporean investors.
I'm of no exception too. I remember subscribing into the Share Builders Plan under PhilipCapital to build my portfolio with ES3 (STI ETF) back then when I started investing. I have stopped doing so and began to build my own portfolio comprising of various indexes, ETFs and stocks long time ago. But I'm still aware that some of the fellow investors I know still have STI as part of their portfolio.
Albeit not as many as it used to be.
Why? You might be asking.
In the last decade or so, more and more investors are looking into investments beyond the shores of Singapore. And there's a good reason behind it. Since the last financial crisis in 2008, the S&P 500 has already recovered from its previous high and even doubled itself. The same can't be said for the STI. STI has recovered from the lows in 2009 but the previous high in 2007 was never seen again. With such dismal performance in the last decade, you couldn't blame investors for abandoning the STI.
Part of the dismal performance of the STI index also stems from the challenges that the SGX is facing. It's a know fact that the SGX has struggled to attract new listings. Our own notable homegrown companies like Razer and SEA Group opt to list in overseas markets rather than our own exchange. In seven out of the last nine years, the SGX witnessed an overall net delisting with the overall number of companies listed in SGX down to 723 in 2019 as compared to 783 in 2010.
Not only do we have less listings on SGX, the securities daily average traded value (SDAV) had also fallen to S$1.04 billion in 2019 from a value of S$1.5 billion in 2010.
The regional competition has also not make things any easier for our Singapore market too. Easier access to China capital which encourages higher valuation and more visible presence in the China market makes HKEX a more attractive option than SGX.
In such situation, it's little surprise that the STI do not perform as well as it's intended to be. And I'm suspecting another part of the reason could be attributed to the inability of the index (or rather our economy) to move in tandem with the general economic trend in the world.
Throughout the history, the DJIA has seen healthy replacement of the companies in the index according to the market trend. If you look at the DJIA in recent years, technology sector make up almost 18% of the index. It's clear to most people that technology sector is becoming increasingly important in today's world (especially with COVID-19). Yet, our own STI is still mainly made up of banks (DBS, OCBC and UOB alone make up about ~36% of the STI) and real estates companies. Little of the STI components mix has changed over the past decade and I'm beginning to worry if that is a sign that we are failing to catch up with the rest of the world.
Though it's definitely not rainbows and unicorns for the STI index, I'm aware that the STI could still be an integral part in some of our investment portfolios and have created this visualisation map for simple illustration of the STI overview.
(Last updated on 24 Sep 2020)
In this visualisation map, you could get several key information.
1) The size of the box represent the weight % of the equity in the index. The bigger the box is, the higher the weight % of the equity in the index.
You can see at a glance which companies make up the bulk of STI.
2) The colour of the box represents the current share value of the equity with respect to the SMA 200 value (mainly for the illustration for understanding the trend)
If the current share value of the equity is above its SMA 200 value, the box will be in green. The greener the box is, the higher the current share value is as compared to its SMA 200 value. Similarly, the box will be in red if the current share value of the equity is below its SMA 200 value. The redder the box is, the lower the current share value is as compared to its SMA 200 value. (I wanted to explore using other color schemes but stick to green & red as they are the common colours used for stock price movement)
3) Filter according to institutional/retail investors' net positions is possible with this visualisation. If you want to know which of the components in STI index are more bought than sold by institutions in the past week, just filter accordingly.
Information on this is obtained here.
4) In each box, you will find basic information such as
Name of Equity
Latest share price
% difference from SMA 200 value
If this visualisation is useful to you, please let me know by taking part in the poll below. If there is sufficient interest, I will be looking at updating it on a regular basis.
Do check out my other article on STI here.
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