Venture Corporation is expected to join the STI effective Friday 5 Jan, with the last trading day of existing STI constituent, Global Logistic Properties, expected to be 4 Jan. Venture was selected as it maintained the highest market capitalisation of the STI Reserve on the 2 Jan close.
Venture generated a 115.4% total return in 2017, with institutional net buying totaling S$133 million. The leading global provider of technology services, products and solutions reported its net profit grew 81.4% YoY for its 9MFY17 ending 30 Sep.
Venture is expected to make up between 1.5% and 2.0% weightage in the STI, based on public free-float information and STI weights as of 29 Sep 2017. The IT Sector will then be represented within the STI and the Real Estate Sector is expected to reduce its weightage in the STI by 3.0% to 15.6%.
The Straits Times Index (STI) is the most globally-recognised benchmark index and market barometer for Singapore.
Last year the STI generated a 22.0% total return compared to the MSCI World Index gaining 13.7% (click here for more details). The STI’s five best performing stocks of 2017 included Yangzijiang Shipbuilding Holdings, Global Logistic Properties (“GLP”), City Developments, UOL Group and Genting Singapore PLC.
As many as 13 STI constituents featured amongst the five best performing STI stocks for each of the past three years. The business diversity of the STI stocks is set to widen even more with the scheduled inclusion of Venture Corporation on 5 January 2018, replacing Global Logistic Properties.
As noted by FTSE Russell (click here) Venture Corporation (“Venture”) is expected to join the STI effective 5 January, with the last trading day of existing STI constituent GLP expected to be 4 January. Venture was selected as it maintained the highest market capitalisation of the STI Reserve on the 2 January close. The other four stocks of the STI Reserve List are Suntec REIT, Mapletree Commercial Trust, Keppel REIT and Sembcorp Marine.
Potential New STI Weights
Based on STI weightings on 29 September 2017, GLP had previously maintained a 3.3% weight in the STI whereas Venture, based on its 29 September free-float capitalisation, would have maintained a 1.6% weight in the Index.
However, since the end of the September quarter, Venture has rallied 21.5%, compared to the STI gaining 6.4%. Without taking into considerations the performances of all STI constituents, the recent relative performance of Venture indicates that its weight in the STI could be as high as 1.8% upon inclusion on 5 January.
The potential new weightings based on publically available weights dating back to the 29 September 2017 are tabled below. Click on the stock name to see its full profile in SGX StockFacts.
|29 Sep 2017
29 Sep 2017
|Global Logistic Properties||MC0||3.34||N/A||Real Estate|
|DBS Group Hldgs||D05||12.89||13.13||Financials|
|Oversea-Chinese Banking Corp||O39||12.63||12.86||Financials|
|United Overseas Bank||U11||10.39||10.58||Financials|
|Jardine Matheson Hldgs||J36||6.16||6.27||Industrials|
|Hongkong Land Hldgs||H78||3.95||4.02||Real Estate|
|Jardine Strategic Hldgs||J37||3.68||3.75||Industrials|
|Thai Beverage PCL||Y92||3.05||3.11||Consumer Staples|
|Genting Singapore PLC||G13||2.34||2.38||Consumer Discretionary|
|Ascendas REIT||A17U||2.19||2.23||Real Estate|
|Wilmar International||F34||2.14||2.18||Consumer Staples|
|City Developments||C09||1.84||1.87||Real Estate|
|Singapore Technologies Engineering||S63||1.81||1.84||Industrials|
|CapitaLand Mall Trust||C38U||1.6||1.63||Real Estate|
|Venture Corp||V03||N/A||1.57||Information Technology|
|Jardine Cycle & Carriage||C07||1.35||1.37||Consumer Discretionary|
|CapitaLand Commercial Trust||C61U||1.34||1.36||Real Estate|
|UOL Group||U14||1.33||1.35||Real Estate|
|Hutchison Port Hldgs Trust||NS8U||1.02||1.04||Industrials|
|Yangzijiang Shipbuilding Hldgs||BS6||1.02||1.04||Industrials|
|Golden Agri-Resources||E5H||0.83||0.85||Consumer Staples|
Source: FTSE Russell (www.ftse.com/products/indices/SGX-ST) , SGX My Gateway, SGX StockFacts.
Note weights above are only indicative and based on relative weightings on 29 September 2017. Industry Classification Benchmark (ICB) weightings for the 10 biggest constituents will be available from FTSE Russell in early February here.
New Sector Weights
The potential sector weightings of the STI (based on 29 September 2017 prices) including GLP, and then the inclusion of Venture in place of GLP, are illustrated below. Note the Real Estate Sector is expected to see its Index weightage trimmed by approximately 3.0%.
Source: FTSE Russell (www.ftse.com/products/indices/SGX-ST), SGX My Gateway, SGX StockFacts.
Industry Classification Benchmark (ICB) Sector weightings will be available from FTSE Russell in early February here.
The inclusion of Venture into the STI means the STI will now include the Information Technology (“IT”) Sector. As noted yesterday (click here) the IT Sector was the strongest of the Sectors in Singapore in 2017. Venture generated a 115.4% total return in 2017, with institutional net buying totaling S$133 million. The leading global provider of technology services, products and solutions reported its net profit grew 81.4% YoY for its 9MFY17 ending 30 September.
Venture was founded in 1984 as a global electronics services provider. Today, it is a leading global provider of technology services, products and solutions with established capabilities spanning marketing research, design and development, product and process engineering, design for manufacturability, supply chain management, as well as product refurbishment and technical support across a range of high-mix, high-value and complex products. For more details click here.
STI Reserve List
The STI is a free float adjusted market capitalisation weighted index representing the performance of the largest Singapore stocks which pass the size, free float, and liquidity screens.
The STI Reserve List is used in the event that one or more of the STI constituents are deleted during the period up to the next quarterly review. As detailed in the STI Ground Rules (click here) when a company is going to be removed from the STI the vacancy will be filled by selecting the highest ranking security by full market value in the Reserve List as at the close of the index calculation two days prior to the deletion.
There are further qualifications for the framework of the STI Reserve List in the case as Mergers, Restructuring and Complex Takeovers as described in Section 6.4 of the STI Ground rules.