Sunday, 1 April 2018

Education Series - Market: End Q1 STI Stocks Quick Observation

First quarter of 2018 has passed in a blink of an eye. I thought it would be interesting to look at STI and have a good sense how the STI blue chips are doing, especially when we just had some volatility in Feb and Mar this year.

Source: Business Times, 31 Mar 2018

Based on the table above, I noticed that
  1. Five companies are at a price level of 75th percentile or higher based on their past one-year price range: City Developments, Venture Corp, DBS, OCBC and UOB. Among these, Venture at $28.11 is the closest to its 52 week high, owing to its recent inclusion into STI and the continued optimism on electronic manufacturing sector.
  2. Seventeen companies are now within 25% of their one-year lowest price. This is more than half of the 30 components of STI. Among them, Hutchison Port Holdings ($0.295) and Thai Beverage ($0.78) is at a fresh one-year low. 
  3. Looking at year-to-date numbers, seventeen companies recorded a negative return. The worst performing ones are Hutchison Port Holdings (-25.9%), Starhub (-19.3%) and Yangzijiang (-17.7%). 
  4. There are only three companies that registered a double figure positive returns year-to-date. They are Venture Corp (37.3%), DBS (10.7%) and ST Engineering (10.1%).
  5. PE ratio wise. They range from lowest 2.9 (Hongkong Land) to highest 65.3 (Keppel). 
  6. PB. Lowest is 0.44 (Hongkong Land) while highest is 28.28 (Starhub). 
It is quite clear that STI still managed to cling on to a positive return this year largely due to the banks, which take up 3 out of 5 companies within their 25% of one-year high. Given their significant weightage in the index, STI would likely be in the red year-to-date if they had fared worse. 

Among the traditional mainstay sector of STI, banks fared well, and property play (CDL, UOL, Reits) did okay as of Q1 2018. Sectors like offshore and marine (Keppel, Sembcorp, Yangzijiang), commodity (Wilmar, Golden Agri), Telco (Singtel, Starhub) all saw their companies near one-year-low. 

It is worth noting that all the Jardine family members are doing badly at the moment. Jardine Matheson, Strategic, Cycle & Carriage are all within 25% of their one-year-low. And there is the curious case of Hongkong Land that is priced at the lowest PE and PB among all STI stocks. A blue chip trading at PE 2.9 and PB 0.44 is worth further research to find out why. 

Overall, it seems that STI is going through a rough patch right now. It is down about 5% from the high point of 3,409. Currently it is resting just above its 200-day Moving Average, which also coincidentally sits near the important support level around 3,350. Hence 3,350 is an important point to monitor. Once broken, it could signify more downside.

STI one year chart. Source: InvestingNote


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