The US market has been on a roll, with the Dow Jones Industrial Average (INDEXDJX: DJI), S&P 500 Index (INDEXSP: INX), and NASDAQ Composite Index (INDEXNASDAQ: IXIC).
The Straits Times Index (SGX: ^STI) [STI], however, has languished below its all-time closing high of around 3,805 back in October 2007, nearly 17 years ago.
At the last close, the local bellwether index was trading at 3,336.59, 12% below its all-time high.
But things could be looking up.
We highlight five blue-chips stocks that could propel the Straits Times Index to higher ground to eventually break through its record-high.
DBS Group (SGX: D05)
DBS Group is Singapore’s largest bank by market capitalisation.
The lender also occupies the largest proportion within the STI at 22.5% as of 31 March 2024.
Hence, a share price increase in DBS would disproportionately benefit the index.
Year-to-date (YTD), the bank’s shares have risen by nearly 19%.
DBS released a sparkling set of earnings for the first quarter of 2024 (1Q 2024) with net profit at a record high of S$2.95 billion.
Total income rose 13% year on year to S$5.6 billion on the back of an 8% year-on-year increase in net interest income (NII).
The lender declared a quarterly dividend of S$0.54, 42% higher than the S$0.38 paid out a year ago.
CEO Piyush Gupta is optimistic that NII will be modestly better in 2024 compared to a year ago.
Net profit is also expected to be higher than 2023’s levels.
DBS does not rule out the possibility of returning more capital to shareholders in the form of either special dividends or share buybacks.
OCBC Ltd (SGX: O39)
OCBC is Singapore’s second-largest bank and occupies a 16.1% weight within the STI.
Like DBS, the bank also enjoyed a strong set of earnings as higher interest rates lifted its NII and net profit for 1Q 2024.
YTD, OCBC’s share price has risen by 12.3% but there could be more to come as well.
The bank’s total income increased by 8% year on year to S$3.6 billion and its net profit hit a record high of S$1.98 billion for 1Q 2024.
CEO Helen Wong remains confident of the year ahead and expects low single-digit loan growth.
The bank is also on track to deliver on its strategic initiatives and is integrating its recent acquisition of PT Bank Commonwealth Indonesia.
United Overseas Bank Ltd (SGX: U11)
United Overseas Bank, or UOB, is the smallest of the trio of local banks and makes up 11.9% of the STI.
Together, all three banks take up 50.6%, or slightly more than half, of the weight in the bellwether index.
UOB’s share price rose 8% YTD and the bank delivered a mixed performance for 1Q 2024.
Although NII dipped by 2% year on year to S$2.4 billion, the bank’s net profit rose 6% year on year to S$1.5 billion.
CEO Wee Ee Cheong is optimistic about the integration of UOB’s Citigroup (NYSE: C) acquisition and that the bank will focus on cross-selling synergies.
He is also sanguine on the bank’s outlook with the expectation of low single-digit loan growth and double-digit fee income growth for 2024.
Keppel Ltd (SGX: BN4)
Keppel Ltd is an asset manager with solutions spanning the infrastructure, real estate, and connectivity sectors.
The group takes up a 3.1% weight within the STI.
For 1Q 2024, Keppel’s net profit improved year on year excluding the effects of legacy offshore and marine assets.
The asset manager also enjoyed a sharp 51% year-on-year jump in recurring income.
Asset management fees were 52% higher for 1Q 2024 at S$88 million compared with S$58 million a year ago.
Keppel plans to launch three new funds for data centres, education assets, and private credit in 2024.
These funds should pave the way for the group to increase its asset management fees and further increase its recurring income.
Keppel also announced the monetisation of around S$170 million in assets in line with its Vision 2030 priorities, taking the cumulative asset monetisation since October 2020 to more than S$5.5 billion.
Singtel (SGX: Z74)
Singtel is Singapore’s largest telecommunication company (telco) and occupies a 5.8% weight within the STI.
The telco reported a robust set of earnings for its fiscal 2024 (FY2024) ending 31 March 2024.
Although net profit plunged by 64% year on year to S$795 million, this occurred because of non-cash impairments.
Excluding these charges, Singtel’s underlying net profit would have increased by 10% year on year to S$2.26 billion.
The telco also declared a higher total ordinary dividend of S$0.15, 52% higher than the prior year’s S$0.099.
This higher dividend was possible because of S$2 billion of divestments in FY2024 that allowed Singtel to pay out a “value realisation dividend” on top of its normal dividend.
Singtel has identified an additional S$6 billion of assets to be recycled and is confident that its core dividend can track the growth in business performance.
The telco has also launched ST28 with strategic initiatives to create more value for shareholders from FY2025 to FY2028.
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Disclosure: Royston Yang owns shares of DBS Group.
