The Straits Times Index (SGX: ^STI) is home to 30 of the largest companies in Singapore.
As such, the index is widely regarded as the market barometer for the Singapore stock market.
While there are 30 companies in total, the largest among the STI components hold more sway in the index compared to others.
Let’s take a look at which are the 10 biggest blue chips.
|Company||Ticker Symbol||Industrial Classification Benchmark (ICB) Subsector||Index Weight|
|DBS Group Holdings||D05||Banks||18.1%|
|Oversea-Chinese Banking Corporation||O39||Banks||14.3%|
|United Overseas Bank||U11||Banks||11.2%|
|Singapore Telecommunications||Z74||Telecommunications Service Providers||5.7%|
|Jardine Matheson Holdings||J36||General Industrials||5.5%|
|CapitaLand||C31||Real Estate Investment and Services Development||3.4%|
|Ascendas REIT||A17U||Real Estate Investment Trusts||3.4%|
|Singapore Exchange||S68||Investment Banking and Brokerage Services||3.2%|
|CapitaLand Integrated Commercial Trust||C38U||Real Estate Investment Trusts||3.1%|
|Wilmar International Limited||F34||Food producers||3.0%|
Source: FTSE ST Index Series factsheet, as of 30 July 2021
Blue chips, defined
Due to their size, STI component stocks are often referred to as blue chips.
Blue-chip companies are generally defined as large, well-capitalised companies with a long operating track record and a distinctive brand name.
These businesses are usually market leaders in their respective industries and have a dominant competitive edge over smaller competitors.
The Big 10 blue chips
As it stands, the top 10 companies within the Singapore index account for over 70% of the index’s weightage, as shown in the table above.
In fact, Singapore’s three major banks, DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corp. Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11), account for a whopping 43.6% of the STI.
If you add the next largest company, namely Singapore Telecommunications Limited (SGX: Z74), the top four companies would account for almost half of the index’s weight.
Recovery in sight
There has been some good news, with Singapore moving from a COVID-zero approach to living with COVID.
Singapore’s three big banks have restored their dividend payouts to previous levels or above after the Monetary Authority of Singapore (MAS) lifted dividend restrictions.
Speaking of positive news, Singtel reported a return to profit in its latest quarter after suffering a loss in its fiscal first quarter a year ago.
The profits will come in handy as Singapore’s largest telco attempts to transform its business.
Changes are also afoot at CapitaLand (SGX: C31) where its property development arm will be privatised, leaving behind a restructured real estate investment manager (REIM) renamed as CapitaLand Investment Management (CLIM).
Before its exit, CapitaLand delivered a final hurrah, with strong results in its final quarter in its current form.
Elsewhere, compared to our last review in September 2020, CapitaLand Integrated Commercial Trust (SGX: C38U) has made its move into the upper echelons in terms of index weightage.
The real estate investment trust was formed through a merger of CapitaLand Mall Trust and CapitaLand Commercial Trust in November 2020.
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Disclosure: Chin Hui Leong owns shares in DBS Group, OCBC, UOB, CapitaLand Integrated Commercial Trust, and Singapore Exchange.