In 2022, the STI generated a 4.1% price gain, with dividend distributions boosting the total return to 8.4%. This was the strongest stock benchmark performance for year 2022 across the Asia Pacific and Developed Indices, with the FTSE Asia Pacific Index and FTSE Developed Indices declining 16.7% and 18.3% in total return respectively.
Index performances were attributed to multiple factors including sector composition and secular growth, in addition to broader regional and global economic themes. Multiple STI constituents also pressed on with strategic initiatives in 2022. Overarching themes for 2023 include slowing global growth and trade, and persistent above-trend inflation.
For Singapore-listed ETFs, the STI remained the most traded index among ETF investors, with the 2 STI tracking ETFs recording a combined trading turnover of S$1.06 billion in 2022. Primary market unit creations and redemptions crossed S$553 million over the period.
The Straits Times Index (STI) generated a 4.1% price gain in 2022, with reinvested dividends bringing the total return to 8.4%. For much of the year, the STI was among the strongest stock market benchmarks across the globe, and for the majors finished the calendar year just 1.0% behind Brazil’s IBOVESPA Index. This means the STI well outpaced Indices across the Asia Pacific and Developed Economies across the globe over the year.
The STI’s gain in 2022 brought the STI’s gain from the end of 2019 through to the 9 Jan 2023 Morning Session to 14.0%, outpacing a comparatively flat performing region, while marginally trailing the FTSE Developed Index total return of 18.0%.
Last year, the STI remained the most traded stock index among Singapore ETF investors, with the two STI tracking ETFs recording a combined trading turnover of S$1.06 billion in 2022. This was 25% higher than the next most traded index, the Hang Seng TECH Index which traded S$850 million over 2022. Primary market unit creations and redemptions for the 2 STI ETFs, crossed S$553 million over the period with fluid economic developments producing a close to 500-point range for the STI in 2022, up from near 440 points in 2021.
For the 2022 year, the trio of DBS (SGX:D05), OCBC (SGX:O39) and UOB (SGX:U11) ended 2022 with a 46.9% weight in the STI. The trio averaged 13% total returns over the year. On the back of higher interest rates, the trio of banks have reported 8 consecutive quarters of q-o-q NII growth, with the combined 3Q22 NII at S$7.4 billion, up S$1.3 billion from 2Q22.
By comparison, the Bank Sector makes up 6.3% of the FTSE Developed Index and 7.3% of the FTSE All-World Index, which maintain the most Sector exposure to Technology, which was the least performing sector of 2022.
Aside from secular sector performances, growth outlooks also impacted index performances. For instance, while maintaining a 20% exposure to the Bank Sector and a 2% exposure to the Technology Sector, downward growth revisions for Asia’s largest economy saw the FTSE China A50 Index decline 22% in 2022. With risk management applications, the SGX FTSE China A50 Index Futures market generated record average daily trading turnover in 2022 for both the day and overnight sessions.
The USD/CNY also appreciated 15% over the first 10 months of 2022. The comparative strength of the Singapore Dollar to the US Dollar was also a contributing factor to the STI’s performance. The FTSE ASEAN All-Share Index which declined 6.8% in 2022 maintains a 31% weighting to Bank Sector, including an 11% combined weightage to DBS (SGX:D05), OCBC (SGX:O39) and UOB (SGX:U11). While pressing higher for most of the year, the USD/SGD ended the year marginally lower at 1.34, whilst 3 countries that represent close to 60% of the FTSE ASEAN All-Share Index booked depreciations to the USD. The USD/THB ended the year up 4%, the USD/IDR ended the year up 9% and the USD/MYR ended the year up 6%.
In addition, since 2020, multiple corporates have engaged strategic initiatives to enhance operational efficiency and shareholder value. Such initiatives have involved acquisitions, disposals, significant share buybacks, restructuring or pivots to new revenue streams. This theme was also relevant to 8 of the 10 strongest performing STI stocks that were listed for the full 2022 year.
(Sort by Turnover in 2022)
|CapitaLand Integrated Commercial Trust||C38U||0||-89||0||3||87||REITs|
|CapitaLand Ascendas REIT||A17U||2||-251||-7||-2||-139||REITs|
|CapitaLand Investment ***||9CI||16||56||9||13||106||Financial Services|
|Wilmar International||F34||-7||-261||1||5||85||Consumer Non-Cyclicals|
|Mapletree Pan Asia Commercial Trust *||N2IU||-2||-54||-17||-12||-170||REITs|
|Mapletree Logistics Trust||M44U||-1||-86||-16||-12||-104||REITs|
|Genting Singapore||G13||-8||-104||23||26||258||Consumer Cyclicals|
|Hongkong Land||H78||35||-10||-12||-8||24||Real Estate (excl. REITs)|
|Mapletree Industrial Trust||ME8U||-1||-177||-18||-13||-198||REITs|
|Jardine Cycle & Carriage||C07||9||38||39||45||203||Consumer Cyclicals|
|City Developments||C09||-13||-306||24||27||310||Real Estate (excl. REITs)|
|Thai Beverage||Y92||-8||-363||4||7||-26||Consumer Non-Cyclicals|
|Frasers Logistics & Commercial Trust||BUOU||14||4||-24||-19||-49||REITs|
|Keppel DC REIT||AJBU||-8||-206||-28||-25||-155||REITs|
|UOL Group||U14||-6||-30||-5||-3||-9||Real Estate (excl. REITs)|
|DFI Retail Group||D01||-28||-74||2||5||-3||Consumer Non-Cyclicals|
|Emperador **||EMI||N/A||N/A||13||13||-5||Consumer Non-Cyclicals|
Growth, trade, and inflation are the overarching macro themes for 2023, with the global stock and bond markets pricing in moderate recessionary pressures in 2023. Broad downside risks to the market in 2023 are twofold. Firstly, added global interest rate increases may further decelerate growth or exacerbate market volatility and financial stability risks. Secondly, there may be further escalation in global geopolitical tension.