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STI Books 12% YTD Total Return, After Record ETF Inflows in 2020

  • In the YTD through to the 30 August morning session, the STI has generated a 9.2% gain with reinvested dividends boosting the total return to 12.3%. This followed an 8.1% decline in total return in 2020, with the YTD gains bringing the STI’s average annualised 10-year total return to 4.6%.
  • The STI ETFs drew significant investor participation in the 10 months from March 2020 through to the end of December 2020, with more than S$900 million of net inflows and amounting to more than half of the combined inflows of the two STI ETFs over the past decade.
  • For the 10 month period, the volume-weighted average prices (VWAP) for the SPDR STI ETF and the Nikko AM STI ETF were S$2.64 and S$2.69. With the SPDR STI ETF and Nikko AM STI ETF ending the 30 August 2021 morning session at S$3.14 and S$3.16 respectively, the two ETFs have since generated ~20% total returns (incl. dividends) on the 10-month VWAP prices.

The STI comprises Singapore’s 30 most actively traded and largest stocks by market value. The STI is the headline index of the FTSE ST Index Series, a family of indices created by Singapore Press Holdings, Singapore Exchange (“SGX”) and FTSE Group. Note that following the market close on 2 September 2021, the results of the latest quarterly rebalance of the STI and the FTSE STI Index Series balance will be released here.

In the YTD through to the 30 August morning session, the STI has generated a 9.2% gain with reinvested dividends boosting the total return to 12.3%. This followed an 8.1% decline in total return in 2020, with the YTD gains bringing the STI’s average annualised 10-year total return to 4.6%. Of the current 30 STI constituents, the six strongest performers over the past 10 years were Keppel DC REIT, Frasers Logistics & Commercial Trust, Mapletree Industrial Trust, Venture Corporation, Mapletree Logisitics Trust and Mapletree Commercial Trust, all of which were not part of the STI 10 years ago. Two of these constituents also listed over the ten-year duration, with Keppel DC REIT in December 2014, and Frasers Logisitics & Industrial Trust, now Frasers Logisitics & Commercial Trust, in June 2016.

SGX lists two Exchange Traded Funds (“ETFs”) for trading that invest in the 30 STI constituents, the SPDR® STI ETF and Nikko AM STI ETF. The SPDR® STI ETF was launched in 2002, and is managed by State Street Global Advisors, while Nikko Asset Management manages the Nikko AM STI ETF that was launched in 2009.

ETF inflows generally result from primary market creation of ETF units by the participating dealers to meet the excess demand from institutional and retail investors for the ETFs on the exchange. Outflows, on the other hand, are resulted from primary market redemption due to selling activities of institutional and retail investors in the markets.

The chart below details the accumulated combined monthly inflows/outflows of both STI ETFs over the past 10 years, the majority of which were contributed by retail investors.

Accumulated STI ETF Flows Aug 11 - july 21

The combined Assets Under Management (“AUM”) of both STI ETFs advanced from S$404.3 million at the end of July 2011 to S$2,238 million at the end of July 2021. This was on the back of a total of S$1,587.9 million of inflows into the two ETFs over the 10 years. Of the S$1,587.9 million in inflows, the two STI ETFs drew 57% or S$907.4 million of the inflows from 1 March 2020 to 31 December 2020. For the first seven months of 2021, the two STI ETFs saw combined outflows of S$67.2 million, with the 10 years accumulated net inflows in the chart above declining from S$1,655.1 million in December 2020, to S$1,587.9 million in July 2021.

For the 10-month period through to the end of 2020, the Volume Weighted Average Price (“VWAP”) for the SPDR® STI ETF was S$2.64, and S$2.69 for the Nikko AM STI ETF. The SPDR STI ETF ended the morning session on 30 August 2021 at S$3.14, while the Nikko AM STI ETF ended at S$3.16. Including the two STI ETF divided distributions in 2021, the 2021 year to date has seen the two ETFs generate approximate 20% returns on their respective 10-month VWAP prices.

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets. To find out more about ETFs, click here

Recent Retail Flows of STI Constituents

Parallel to the STI ETF inflows from 1 March 2020 to 31 December 2020, the current 30 STI stocks saw S$6.6 billion of net retail inflow over the same 10 months.

Excluding the three banks, the remaining 27 stocks saw S$3.9 billion of net retail inflow over the 10-month period, and have since received S$1.6 billion of net retail inflow in the 2021 year through to 28 August 2021. Among the 27 stocks, Singapore Telecommunications (“Singtel”) has seen the largest net retail inflow in the 2021 YTD to 28 August, at S$333 million, while Yangzijiang Shipbuilding had the largest net retail outflow, at S$336 million.

  • Yangzijiang Shipbuilding was also the STI’s biggest mover last week, rallying 14.0% over the week to close at S$1.63, with the re-opening of the Ningbo-Zhoushan seeing a sharp rebound in global shipbuilders, taking its 2021 total return through to the morning session on 30 August 2021 to 78.0%. 
  • On 12 August, Singtel reported a turnaround in its 1QFY22 (ended 30 June) to S$445 million net profit, from a net loss of S$20 million in 1QFY21 on the back of improved operating and business environments and a stronger Australian Dollar. Since 26 July, Singtel has outpaced the global telecommunications sector, with a 7.0% total return, compared to flat returns for the global US$4 trillion sector.

Originally Posted on August 30, 2021 – STI Books 12% YTD Total Return, After Record ETF Inflows in 2020

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