STI Maintains 2.4% YTD Total Return as GDP Growth Slows

• The STI generated a 2.4% total return over the first 15 weeks of 2023, with 20 gainers, one stock unchanged and nine decliners. The global macro background of persistent inflation and decelerating growth, in conjunction with ongoing geopolitical tensions saw manufacturing and wholesale trade weigh 1Q23 Adv GDP growth to +0.1% YoY.
   
• The five strongest performers of the STI in the YTD included Sembcorp Ind, Keppel Corp, Genting Sing, Keppel DC REIT and Mapletree Log Tr, with the five stocks averaging 22% total returns, while the decliners were led by CityDev, YZJ Shipbldg, ThaiBev, Singtel and HongkongLand, which averaged a 6% decline in total returns.
   
• Sembcorp Ind net profit in 2022 (before exceptional items) was S$883 million, up 87% from S$472 million in 2021. The group maintains renewable energy is expected to transform the global power mix through 2027 and become the largest source of electricity. On 30 March, the group completed the acquisition of 892MW of operational wind and solar assets in China, with the Group’s renewables portfolio of solar, wind and energy storage in operation and under development globally, at 10.3GW.
   
• The two STI tracking ETFs maintain combined AUM of S$2.2 billion, with YTD net primary market redemptions of S$59 million and secondary market turnover of S$217 million as of 14 April. In March, the two STI ETFs also recorded a 26-month high in combined net purchases on secondary market.

Following its 8.4% total return in 2022, the STI has generated a 2.4% total return for the 2023 year though to 14 April. The two STI tracking ETFs maintain combined AUM of S$2.2 billion. Together the two ETFs has booked net primary market redemptions of S$59 million and secondary market turnover of S$217 million in the 2023 year through to 14 April. In March, the two STI ETFs also recorded a 26-month high in combined net purchases on secondary market, as the STI retested November lows, while seeing a 220 point plus trading range.

As detailed in the 1Q23 Advanced GDP report, Singapore’s GDP growth is projected to be sub-trend this year, with the drag on global investment and manufacturing from tighter global financial conditions expected to intensify in the quarters ahead. This parallels the global economy which is also expected to be sub-trend in 2023. As expected manufacturing and wholesale trade weight the advanced 1Q23 GDP report, which took observations from January and February into account. Some slowdown in global growth and trade was built into expectations last year, accounting for the decline in global technology stocks in 2022 as opposed to their gains in 1Q23.

The five strongest performers of the STI over the past 15 weeks included Sembcorp Industries, Keppel Corporation, Genting Singapore, Keppel DC REIT and Mapletree Logistics Trust, with the five stocks averaging 22% total returns. Three of these stocks also booked the largest net institutional inflows proportionate to market capitalisation within the STI over the past 15 weeks. These were Genting Singapore, Sembcorp Industries and Keppel DC REIT.

Following a 73% total return on S$220 million of net institutional inflow in 2022, Sembcorp Industries has generated a 27% total return on S$90 million of net institutional inflow. Including the discontinued operation, Sembcorp Industries FY22 (ended 31 Dec) net profit before exceptional items in was S$883 million compared to S$472 million in FY21. Including the discontinued operation and exceptional items, the Group recorded a net profit of S$848 million in FY22, 204% higher than S$279 million in FY21. The Group maintains that renewable energy is expected to transform the global power mix through 2027 and become the largest source of electricity. On 30 March, Sembcorp Industries completed the acquisition of 892MW of operational wind and solar assets in China, with the Group’s renewables portfolio of solar, wind and energy storage in operation and under development globally at 10.3GW.

Despite the flat return over the past 15 weeks, The STI’s newest addition, Emperador Inc, has been among the 10 best performing current STI constituents since it debuted on SGX on 14 July 2022. Emperador Inc operates an integrated global business of manufacturing, bottling and distributing distilled spirits and other alcoholic beverages from the Philippines, United Kingdom, Spain and Mexico through its subsidiaries. The company announced on 12 April that despite posting a relatively flat net profit last year, the company still managed to show profitability amid disruptions in global logistics and high inflation rates.

Meanwhile the STI decliners over the past 15 weeks were led by City Developments, YZJ Shipbuilding Holdings, Thai Beverage PCL, Singapore Telecommunications and HongkongLand Holdings, which averaged a 6% decline in total returns.

The 30 STI stocks, sort by highest total returns in the 2023 YTD are tabled below.

 Source: SGX, Refinitiv (Data as of 14 April 2023)

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Originally Posted April 17, 2023 – STI Maintains 2.4% YTD Total Return as GDP Growth Slows