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SGX Market Updates

Author: SGX   |   Latest post: Tue, 22 Nov 2022, 7:14 PM

 

Five STI Heavyweights Book 9% QTD Total Return

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  • With one week remaining for 3Q22, the STI has booked a 5.5% total return for the quarter, outpacing the FTSE Developed Index’s 1.3% decline. The FTSE Developed Index declined below mid-June lows on Friday, coinciding with US interest rates expectations as hawkish as they have been all year.
  • The STI’s five largest weights – DBS, OCBC, UOB, Singtel and Jardine Matheson make up 56% of the STI weights, and have averaged 9% QTD total returns, bringing their average YTD total return to 10%. For the QTD, the five stocks have  seen combined net fund inflows S$1.25 billion.
     
  • During 3Q22, all five stocks provided financials or business updates. The three banks reported S$6.0 billion in combined 2Q22 net interest income, while for its 1QFY23 (ended 30 June) Singtel updated underlying net profit increased 11%, while Jardine Matheson reported underlying profit increased 22% for 1H22 (ended 30 June). 
     
  • The two ETFs that track the STI have also seen net inflows of S$9 million in the QTD, which currently marks the first quarter of combined inflows for the two ETFs since the S$33 million of inflows in 3Q21. The combined AUM of the two STI ETFs is currently S$2.2 billion, one-fifth of the total AUM of all SGX-listed ETFs.
     

On Friday, the FTSE Developed Index pushed below its mid-June lows, forming a new intra-year low for 2022, which has brought its 2022 YTD decline in total return to 19%. This has coincided with the outlook for the US Fed Funds Target Rate (FFTR) at the most hawkish levels seen all year, with CME FedWatch expectations currently c.25%/75% for a 50bps/75bps hike on 2 Nov, aligning with last week’s FOMC dot plot seeing the FFTR at 4.4% by end of 2022. At the same time, smoothed global daily COVID-19 cases are currently at the lowest levels that have been reported all year. Apart from equities, bonds and currencies have naturally been impacted by the staunch Fed Reserve stance on inflation, providing a multiplex of market drivers across Asia, particularly as China and Japan are not tightening their respective monetary policies.

In Singapore, the STI has generated a 7% total return in the 2022 YTD, with the five biggest weights of the Index averaging 10% total returns. As tabled below, the combined weight of these five stocks amounted to 56% as of the end of August. The five stocks also represent more than 40% of the day-to-day turnover of the Singapore stock market, with four of the five stocks among the 10 SGX-listed stocks with the tightest Bid/Ask spreads in terms of basis points (bps) last week.  

 

Five Largest Weights of STI

Code

STI Weight as of 31 Aug %

Mkt Cap S$M

QTD Net Insti Inflow S$M

QTD Total Return %

YTD Net Insti Inflow S$M

YTD Total Return %

Last Week Average Bid/Ask Spread (bps)

DBS

D05

19.5

85,959

602

14

-152

6

4.36

UOB

U11

14.0

45,449

-51

6

-301

5

4.81

OCBC Bank

O39

11.6

54,299

481

8

510

11

8.86

Singtel

Z74

6.5

43,744

198

7

740

16

37.27

JMH USD

J36

4.0

22,955

18

10

7

11

9.15

Total

 

55.6

252,407

1,249

 

804

 

 

Average

 

 

 

 

9

 

10

 

Source: SGX (Data as of 23 Sep 2022), FTSE Straits Times Index August 31 Factsheet.

 

During 3Q22, all five stocks provided financials or business updates.

  • Together, DBS Group Holdings (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB) rank among the five largest stocks across South East Asia by market capitalisation. Rising interest rates have provided a boost to net interest incomes (NII) of DBS, OCBC, UOB through net interest margins (NIMs). NIMs are largely determined by the average rate paid on the liabilities versus the average rate received on the assets of the banks, which contributes to NII along with growth of loan books. For the trio, 2Q22 NIMs rose 13bps YoY for both DBS and OCBC, and 11bps YoY for UOB. For the loan books, UOB and OCBC maintained loan growth of 8% YoY, with DBS reporting loan growth of 7% YoY. All three banks expect loan growth in the mid-single digits for the remainder of the year.
     
  • On 24 Aug, Singapore Telecommunications (Singtel) reported its business update for its 1Q23 (ended 30 June). Singtel reported improved operational performance and exceptional gains from Airtel and dilution of the Group’s effective shareholding in Australia Tower Network, which led to a 11% increase in underlying net profit compared with the same period last year.
     
  • On 28 July, Jardine Matheson Holdings reported a strong improvement in the Group’s profitability in the first half compared with the same period last year, with a significantly improved performance in Southeast Asia, particularly by Astra, and a further contribution to growth from the simplification of the Group’s holding structure. Jardine Matheson Holdings recorded underlying profit of US$747 million for the period, up 22% against the prior year.
     

The two Exchange Traded Funds (ETFs) that track the STI have a seen net inflows of S$9 million in the QTD, which currently marks the first quarter of combined inflows for the two ETFs since the S$33 million of inflows in 3Q21. The combined AUM of the two STI ETFs is currently S$2.2 billion, one-fifth of the total AUM of all SGX-listed ETFs. Since the end of 2019, both STI ETFs have generated 10% total returns and ranked among the top five most traded ETF by daily averaged traded value.

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Related Stocks

Chart Stock Name Last Change Volume 
DBS 34.75 -0.25 (0.71%) 2,903,600 
UOB 30.25 -0.02 (0.07%) 2,755,300 
OCBC Bank 12.25 -0.09 (0.73%) 3,784,700 
Singtel 2.70 0.00 (0.00%) 9,637,900 
JMH USD 47.73 -1.09 (2.23%) 174,400 

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