Singapore’s STI crosses 4,000 mark for the first time
Rise could not be sustained and the STI closed at 3,972.43
[SINGAPORE] The Straits Times Index (STI) set a record on Friday (Mar 28) as it crossed the 4,000 mark for the first time in early trade.
The index hit 4,005.18 points shortly after the market opened, according to the Singapore Exchange (SGX). This surpassed its earlier record of 3,991 clocked the previous day on March 27. ShareInvestor data also indicated that as at 9.02 am, 24.9 million shares were traded.
The STI fell back to 3,981.75 as at 9.51 am, with 238.6 million shares worth S$281.7 million having changed hands. The index ended the session even lower at 3,972.43, down 9.14 points or 0.2 per cent, with around 1.3 billion shares worth S$1.3 billion traded.
SGX market strategist Geoff Howie said: “The most recent charge to the new 4,005.18 all-time high coincides with above-trend gross domestic product growth in 2024 at 4.4 per cent, and a cautiously optimistic market outlook for 2025.”
This could indicate positive sentiment for investors, said Daphne Tan, business development director at CMC Markets Singapore.
“The STI breaking 4,000 is a key psychological milestone, which could be interpreted as strong investor confidence, resilient blue-chip performance and a favourable economic climate,” she added.
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Noting the index’s new record, SGX said: “Since its inception in 1966, the STI has delivered strong returns to investors, with a total return of 40 per cent over the last three years, (representing a) compound annual growth rate (CAGR) of 11.9 per cent.”
The STI has even surpassed the S&P 500, which has a total return of 31 per cent and a CAGR of 9.4 per cent, the bourse operator noted.
Howie highlighted that the benchmark index maintains one of the highest dividend yields regionally.
Singapore’s trio of banks, which account for more than half the index, “significantly contribute” to the 4.5 per cent indicative yield, and financial services are a cornerstone of the city state’s economy, he said.
The Republic’s lenders were trading mixed as at 10.07 am. DBS was up 0.1 per cent or S$0.06 at S$46.64; OCBC rose 0.1 per cent or S$0.02 to S$17.40. UOB declined 0.2 per cent or S$0.09 to S$38.17.
Investment management firm Yangzijiang Financial was trading heavily on Friday.
At 10.16 am, it was the most traded counter on the exchange by volume, and was up 1.3 per cent or S$0.01 at S$0.795, with 28.7 million shares changing hands.
Howie observed that ST Engineering and Sembcorp Industries led STI’s charge for Q1 FY2025.
At 10.30 am, ST Engineering was trading 0.7 per cent or S$0.05 higher at S$6.78, and Sembcorp was flat at S$6.37.
He pointed out that both companies have had their 12-month consensus estimate target price revised upwards for the first quarter of FY2025. ST Engineering’s consensus was upgraded from S$5.02 to S$6.85; Sembcorp’s was raised from S$6.82 to S$7.32.
This comes as Singapore’s industrials sector booked the most net institutional inflow in March and bucked broader net outflows, Howie noted.
“This has seen ST Engineering’s average daily turnover (ADT) more than double in Q1 FY2025 from 2024 levels to S$42 million,” he added.
Industrials ride wave of developments abroad, uncertainty ahead
Another 30 industrial stocks had their ADT more than double in Q1 FY2025, said Howie.
This was driven by developments abroad that have “put industrial value chains clearly in the frame”, a trend which has buoyed sectors related to engineering, construction, manufacturing and transportation, he said.
With the Singapore economy becoming more outward-oriented, Howie notes that nearly half the revenue associated with the STI is generated outside the city state, mostly across the Asia-Pacific.
He said: “Industrials are benefiting from China’s efforts to strengthen regional supply chains with services-led growth.
“Simultaneously, coordinated structural policies from the US Treasury, Commerce Department and USTR (United States Trade Representative) are focused on reindustrialising the US. Additionally, Asean policymakers continue to bolster economic integration and movement of capital goods within.”
He added: “(Yangzijiang Shipbuilding), our strongest performing constituent over the past 10 years, is a Jiangsu-based shipbuilder that has pivoted to a cleaner and greener production line, selling most of its ships to Canada, Europe and Japan.”
CMC Markets Singapore’s Tan noted that recent US market movements could indicate volatility ahead, adding that monitoring shifts in policy, economic data and sentiment could be crucial in navigating the uncertainty.
“While the US market may not be necessarily past its peak, the volatility that we’re witnessing may continue sporadically throughout (US President Donald) Trump’s term. His policies and mandate tend to create such volatility.”
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