Welcome to this week’s edition of top stock market highlights.
Straits Times Index (SGX: ^STI)
The Straits Times Index, or STI, delivered an impressive performance last year.
The bellwether blue-chip stock index returned 23.5% in 2024, marking its strongest performance in more than a decade.
In December 2024, the index was also within a hair’s breadth of surpassing its all-time high of 3,906.16 recorded in October 2007.
Despite this feat, the STI’s price-to-book ratio, a measure of the valuation of the largest companies on the index, stood at just 1.3 times.
This level was far below the 2.5 times witnessed during the previous peak in 2007.
The best performer in the STI was Yangzijiang Shipbuilding (SGX: BS6), which we covered when we released our 2024 year-in-review which you can read about HERE.
Whether the index will continue to do well this year will depend on the business fortunes of the companies within it.
With macroeconomic worries, higher interest rates and an incoming President Donald Trump threatening higher tariffs, the market landscape should be an interesting one this year.
Micron (NASDAQ: MU)
Micron Technology announced that it plans to invest US$7 billion over several years to expand its manufacturing footprint in Singapore.
The demand for memory chips is surging because of the increase in usage of generative artificial intelligence (AI).
Micron broke ground on the new facility earlier this week, with the plant set to commence operations in 2026.
This new facility, which will create 1,400 jobs, will be used to package high-bandwidth memory chips, the type that is widely used in AI data centres.
Micron is among a group of chipmakers who are expanding their production capabilities beyond China and Taiwan in a bid to lessen their reliance on these two countries.
Tensions between the US and China are one reason why these firms are seeking to diversify their suppliers.
Apart from Micron, NXP Semiconductors (NASDAQ: NXPI) and a company backed by Taiwan Semiconductor Manufacturing Co (NYSE: TSM) are building a US$7.8 billion wafer plant in Singapore.
DBS Group (SGX: D05)
DBS hit another significant milestone recently.
Singapore’s largest bank saw its share price hit an all-time high of S$45.44, surpassing the S$45 level for the first time.
This surge came about because of optimism that the bank can sustain its level of net interest income this year.
The surge in interest rates since 2022 has led to the bank reporting soaring profits as its net interest margin expanded.
Although the US Federal Reserve cut interest rates for the third time in 2024 last December, the central bank has pencilled in just two cuts this year.
This was in contrast to its previous projection of four interest rate cuts as recently as September 2024.
With interest rates set to hover “higher for longer”, investors are optimistic that DBS can maintain its net interest margin.
With loans set to grow, this environment could lead to higher net interest income.
Coupled with higher non-interest income, the bank could see its total income continue climbing, leading to overall higher profits and bigger dividend payouts.
DBS is set to release its 2024 full-year earnings in February and will hold its annual general meeting on 28 March 2025 where CEO designate Tan Su Shan will take over the reins from incumbent Piyush Gupta.
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Disclosure: Royston Yang owns shares of DBS Group.
