StarHub to be dropped from STI, replaced by Dairy Farm

PAN-ASIAN retailer Dairy Farm will join the benchmark Straits Times Index with effect from Sept 24, replacing telco StarHub.

The latest index review raises the STI's weightage of Jardine group companies - namely Dairy Farm, Jardine Matheson, Hongkong Land, Jardine Strategic and Jardine Cycle & Carriage - to 15.4 per cent. 

The Jardine companies are linked by a web of cross-holdings. The conglomerate was founded in China and operates principally in Greater China and South-east Asia.

All the Jardine companies except Jardine C&C are secondary listings, and quoted and traded in US dollars.

In spite of this, the majority of their day-to-day trading volume is generally transacted on the Singapore Exchange (SGX), the bourse operator previously said. Hutchison Port Holdings Trust is another STI stock traded in US dollars.

Dairy Farm is expected to have a weightage of 1-1.5 per cent, the SGX said in a market update.

Dairy Farm generated a total return of 24.2 per cent in the first eight months of 2018 (in Singdollar terms), and will be one of four STI stocks representing the consumer goods industry, together with Thai Beverage, Wilmar and Golden Agri-Resources.

Dairy Farm's inclusion gives consumer goods stocks a 6-7 per cent weight on the STI, the SGX said.

The next quarterly review of the STI will take place in December. The STI reserve list, comprising the five highest-ranking non-constituents by market cap, are all real estate investment trusts (Reits).

In order of size, they are Suntec Reit, Mapletree Commercial Trust, Keppel Reit, Mapletree Logistics Trust and Mapletree Industrial Trust.

The STI is a free float-adjusted market cap-weighted index representing the performance of the 30 largest Singapore stocks which pass the size, free float, and liquidity screens.

StarHub chief strategic partnership and investor relations officer Jeannie Ong said: "Irrespective of this development and barring the fact that the market has been bearish on the telco sector for some time now, this will only spur us to work even harder to get the fundamentals right again. We will win back the confidence of investors as we deliver innovation and value to our customers."