Dear readers, how to invest into the Straits Times Index (STI) and Singapore stocks now amidst the current lacklustre market and economic backdrop?
Overall, for Year 2020 to-date, the global and Singapore stocks markets have really been volatile. First, there was a sell-off in global stocks equities in March this year, followed by a slight rebound, then dips and right now we are seeing a general consolidation in stocks. The winners so far have been healthcare related and health protection equipment stocks amidst the backdrop of Covid-19. But other than those stocks, I am of the view that generally, investment into a typical Singapore stock would not have been a good outing for investors this year.
For investors who are into Straits Times Index (STI) stocks, they would also be caught by surprise too for it has really been a mixed bag for Straits Times Index (STI) stocks with more of these stocks in my view performing worse than for better.
I think one surprise this year to-date for investor in relation to STI stocks performing badly would be Singtel stock. Singtel stock closed yesterday at $2.28, this is equal to the price on 23 March 2020 where many of the Straits Times Index and Singapore stocks performed the worst this year. Singtel stock closed $3.37 on 31 Dec 2019 which means year-to-date, Singtel stock has given up nearly one-third of its value since last year.
Another surprise this year to-date would be Keppel corporation stock. Keppel stock has been heading south ever more after Temasek Holdings pulled out from its offer to acquire Keppel corporation.
Those investors who are banking on the recovery of Hong Kong-related stocks and have invested into Straits Times Index Hong Kong-related plays in DairyFarm stock, HongKong Land stock, Jardine C&C stock, JMH stock, JSH stock would be equally disappointed as well. These stocks have been trending lower in general. Apart from the above stocks, investors into Straits Times Index plays like ComfortDelgro stock and SATS stocks have also seen their investments go south.
At this point in time, I would think the next group of STI stocks which may have to go south soon in line with the general bearish outlook of global and Sinagapore economies would be the STI banking stocks in DBS stock, OCBC stock and UOB stock. At $20.73 per share, DBS stock seems high to me in this market backdrop where Singapore is having a recession and the fight against Covid-19 and its economic fallouts are far from over. Same with OCBC stock and UOB stock. Already, the move by the authorities to cap the dividends payouts of these stocks seem to me the trigger for an eventual correction of the stocks aligned to the general market conditions.
Having said all of the above, to invest in Singapore stocks or Straits Times Index (STI) stocks now is to really continue to adopt a Sustainable and Growth (SG) investing strategy (the SG Stocks Investing way) via investing in the Singapore Straits Times Index (STI) through the STI ETF (ES3.SI). In case investors think there is not much profit to be gained from STI ETF, think again. The ES3.SI ETF closed at $2.241 on 23 Mar 2020. If an investor invest in the STI ETF on 23 Mar 2020 and holds it till yesterday where the price is $2.5; the investor would have gained 13.8% in capital appreciation not counting dividends! This will be a decent investing performance against the current markets environment.
Let us invest the SG way!