Can the Straits Times Index Soar to New Highs in 2025?

The Smart Investor12-19

Investors with money parked in Singapore equities are a happy bunch this year.The Straits Times Index, or STI, has outperformed many Asia-Pacific markets in the past two years and gained over 16% as ...

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Cosmograph
12-19
Cosmograph
when 53% of your index is 3 local banking stocks... WTF do u think? And 2 have big brother to protect. 🤦🏻‍♂️

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3,906 achieved back in October 2007.Amid the bullish mood, investors may wonder if the index is poised to surpass its all-time high next year.Let’s break the index down into its major components to assess if there is a high probability of this happening.Banks are leading the wayFirst off, investors should note that more than half of the STI is comprised of the three local banks, namely DBS Group, OCBC Ltd, and $United Overseas Bank(U11.SI), or UOB.DBS, being Singapore’s largest bank, takes up nearly a quarter of the index’s weight while OCBC and UOB had weights of 16.3% and 12.6%, respectively.Together, the trio of banks occupied 53% of the STI’s value as of 29 November 2024.For this year, these banks are responsible for powering the index to its 17-year high.All three banks have hit their all-time highs amid a flurry of strong financial results brought about by surging interest rates.The question is whether these banks can continue to do well in 2025 to help the index climb further.For DBS, CEO Piyush Gupta thinks that net interest income (NII) will hover around 2024 levels as a decline in net interest margins will be offset by higher loan growth.Non-interest income, however, should see high-single-digit year-on-year growth.UOB’s CEO, Wee Ee Cheong, projects high single-digit loan growth and double-digit fee income growth for the lender next year.OCBC did not provide any guidance for 2025 but back in May this year, CEO Helen Wong announced that the bank will invest HK$1.5 billion over the next three years to modernise its technology platforms, channels, and products.There is an overall positive tone coming from the three banks as they believe that interest rates should hover around current levels or be slightly lower.The US Federal Reserve is likely to go through with its third consecutive rate cut for 2024 when it convenes on 18 December.However, experts believe that there will be a slower pace of rate cuts in 2025 as inflation has proven sticky and with the new President-Elect Donald Trump’s policies being inflationary, too.Singtel introduces its value realisation dividendSingtel is the next stock after UOB in terms of weight and contributes 6.6% to the index’s value.The telco has done well since it introduced its strategic reset back in 2021.For its recent first half of fiscal 2025 (1H FY2025) earnings, revenue stayed flat year on year but operating profit climbed 27% year on year to S$738 million, led by its Optus and NCS divisions.The group’s underlying net profit improved by 6% year on year to S$1.2 billion.The good news is that the interim dividend rose to S$0.07, higher than the prior year’s S$0.052, and comprises a value realisation dividend (VRD) of S$0.014 along with a core dividend of S$0.056.Since Singtel’s reset, the telco has raised its annual dividends without fail since FY2021.The new VRD is funded from excess capital churned out by its asset recycling programme and will range from S$0.03 to S$0.06 per year.With new targets for capital recycling along with improvements in core underlying net profit, Singtel looks well-positioned to continue growing in 2025 and beyond.Robust REIT candidatesLet’s not forget that the REITs also show promise despite a tepid 2024 that saw the sector get hit by higher finance costs and inflationary pressures.CapitaLand Integrated Commercial Trust, or CICT, takes up close to 3% of the index and is the largest REIT listed on the stock exchange.CapitaLand Ascendas REIT, or CLAR, comes in close with a 2.7% weight.CICT posted a healthy performance for the first nine months of 2024 as gross revenue rose 2% year on year and net property income increased by 5.4% year on year.CLAR just announced its first sale and leaseback transaction with DHL USA for S$150.3 million which is yield-accretive and will bolster its US portfolio.Other promising companiesAside from the six stocks mentioned above, other promising candidates can benefit from the STI.Keppel Ltd occupies a 2.65% weight within the index and the asset manager has done well for 9M 2024.Although net profit was comparable year on year, recurring income grew 14% year on year for 9M 2024 as the group continued growing its funds under management.Singapore Exchange Limited, or SGX, takes up 3% of the index’s value and the bourse operator reported an encouraging result for its fiscal 2024 ending 30 June 2024.Revenue inched up 3.1% year on year to S$1.2 billion while net profit (excluding exceptional items) increased by 4.5% year on year to S$525.9 million.The exchange also upped its quarterly dividend from S$0.085 to S$0.09.Looking ahead, management aims to grow the group’s revenue by 6% to 8% per annum in the medium term.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":383280536563856,"gmtCreate":1734590417875,"gmtModify":1734590422209,"author":{"id":"3561688895444322","authorId":"3561688895444322","name":"Cosmograph","avatar":"https://community-static.tradeup.com/news/5da27652e118329a7cb4c9cea910b77a","vip":1,"crmLevel":6,"crmLevelSwitch":0,"idStr":"3561688895444322","authorIdStr":"3561688895444322"},"htmlText":"when 53% of your index is 3 local banking stocks... WTF do u think? And 2 have big brother to protect. 🤦🏻‍♂️","listText":"when 53% of your index is 3 local banking stocks... WTF do u think? And 2 have big brother to protect. 🤦🏻‍♂️","text":"when 53% of your index is 3 local banking stocks... WTF do u think? And 2 have big brother to protect. 🤦🏻‍♂️","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/383280536563856","repostId":2492865903,"repostType":4,"repost":{"id":"2492865903","kind":"highlight","pubTimestamp":1734574300,"share":"https://ttm.financial/m/news/2492865903?lang=&edition=fundamental","pubTime":"2024-12-19 10:11","market":"sg","language":"en","title":"Can the Straits Times Index Soar to New Highs in 2025?","url":"https://stock-news.laohu8.com/highlight/detail?id=2492865903","media":"The Smart Investor","summary":"The bellwether index is attempting to break its all-time high, but can 2025 be the year when this happens?","content":"<html><head></head><body><p>Investors with money parked in Singapore equities are a happy bunch this year.</p><p>The <strong>Straits Times Index</strong>, or STI, has outperformed many Asia-Pacific markets in the past two years and gained over 16% as of 3 December 2024.</p><p>This puts the index at a 17-year high even as it touches the 3,822 level, and is just shy of its all-time high of 3,906 achieved back in October 2007.</p><p>Amid the bullish mood, investors may wonder if the index is poised to surpass its all-time high next year.</p><p>Let’s break the index down into its major components to assess if there is a high probability of this happening.</p><h2 id=\"id_3194683743\">Banks are leading the way</h2><p>First off, investors should note that more than half of the STI is comprised of the three local banks, namely <a href=\"https://laohu8.com/S/D05.SI\">DBS Group</a>, <a href=\"https://laohu8.com/S/O39.SI\">OCBC Ltd</a>, and $United Overseas Bank(U11.SI), or UOB.</p><p>DBS, being Singapore’s largest bank, takes up nearly a quarter of the index’s weight while OCBC and UOB had weights of 16.3% and 12.6%, respectively.</p><p>Together, the trio of banks occupied 53% of the STI’s value as of 29 November 2024.</p><p>For this year, these banks are responsible for powering the index to its 17-year high.</p><p>All three banks have hit their all-time highs amid a flurry of strong financial results brought about by surging interest rates.</p><p>The question is whether these banks can continue to do well in 2025 to help the index climb further.</p><p>For DBS, CEO Piyush Gupta thinks that net interest income (NII) will hover around 2024 levels as a decline in net interest margins will be offset by higher loan growth.</p><p>Non-interest income, however, should see high-single-digit year-on-year growth.</p><p>UOB’s CEO, Wee Ee Cheong, projects high single-digit loan growth and double-digit fee income growth for the lender next year.</p><p>OCBC did not provide any guidance for 2025 but back in May this year, CEO Helen Wong announced that the bank will invest HK$1.5 billion over the next three years to modernise its technology platforms, channels, and products.</p><p>There is an overall positive tone coming from the three banks as they believe that interest rates should hover around current levels or be slightly lower.</p><p>The US Federal Reserve is likely to go through with its third consecutive rate cut for 2024 when it convenes on 18 December.</p><p>However, experts believe that there will be a slower pace of rate cuts in 2025 as inflation has proven sticky and with the new President-Elect Donald Trump’s policies being inflationary, too.</p><h2 id=\"id_4101775929\">Singtel introduces its value realisation dividend</h2><p><a href=\"https://laohu8.com/S/Z74.SI\">Singtel</a> is the next stock after UOB in terms of weight and contributes 6.6% to the index’s value.</p><p>The telco has done well since it introduced its strategic reset back in 2021.</p><p>For its recent first half of fiscal 2025 (1H FY2025) earnings, revenue stayed flat year on year but operating profit climbed 27% year on year to S$738 million, led by its Optus and NCS divisions.</p><p>The group’s underlying net profit improved by 6% year on year to S$1.2 billion.</p><p>The good news is that the interim dividend rose to S$0.07, higher than the prior year’s S$0.052, and comprises a value realisation dividend (VRD) of S$0.014 along with a core dividend of S$0.056.</p><p>Since Singtel’s reset, the telco has raised its annual dividends without fail since FY2021.</p><p>The new VRD is funded from excess capital churned out by its asset recycling programme and will range from S$0.03 to S$0.06 per year.</p><p>With new targets for capital recycling along with improvements in core underlying net profit, Singtel looks well-positioned to continue growing in 2025 and beyond.</p><h2 id=\"id_3192126439\">Robust REIT candidates</h2><p>Let’s not forget that the REITs also show promise despite a tepid 2024 that saw the sector get hit by higher finance costs and inflationary pressures.</p><p><a href=\"https://laohu8.com/S/C38U.SI\">CapitaLand Integrated Commercial Trust</a>, or CICT, takes up close to 3% of the index and is the largest REIT listed on the stock exchange.</p><p><a href=\"https://laohu8.com/S/A17U.SI\">CapitaLand Ascendas REIT</a>, or CLAR, comes in close with a 2.7% weight.</p><p>CICT posted a healthy performance for the first nine months of 2024 as gross revenue rose 2% year on year and net property income increased by 5.4% year on year.</p><p>CLAR just announced its first sale and leaseback transaction with DHL USA for S$150.3 million which is yield-accretive and will bolster its US portfolio.</p><h2 id=\"id_3234657557\">Other promising companies</h2><p>Aside from the six stocks mentioned above, other promising candidates can benefit from the STI.</p><p><a href=\"https://laohu8.com/S/BN4.SI\">Keppel Ltd</a> occupies a 2.65% weight within the index and the asset manager has done well for 9M 2024.</p><p>Although net profit was comparable year on year, recurring income grew 14% year on year for 9M 2024 as the group continued growing its funds under management.</p><p><a href=\"https://laohu8.com/S/S68.SI\">Singapore Exchange Limited</a>, or SGX, takes up 3% of the index’s value and the bourse operator reported an encouraging result for its fiscal 2024 ending 30 June 2024.</p><p>Revenue inched up 3.1% year on year to S$1.2 billion while net profit (excluding exceptional items) increased by 4.5% year on year to S$525.9 million.</p><p>The exchange also upped its quarterly dividend from S$0.085 to S$0.09.</p><p>Looking ahead, management aims to grow the group’s revenue by 6% to 8% per annum in the medium term.</p></body></html>","source":"thesmartinvestor_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Can the Straits Times Index Soar to New Highs in 2025?</title>\n<style 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margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCan the Straits Times Index Soar to New Highs in 2025?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-19 10:11 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://thesmartinvestor.com.sg/can-the-straits-times-index-soar-to-new-highs-in-2025/><strong>The Smart Investor</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Investors with money parked in Singapore equities are a happy bunch this year.The Straits Times Index, or STI, has outperformed many Asia-Pacific markets in the past two years and gained over 16% as ...</p>\n\n<a href=\"https://thesmartinvestor.com.sg/can-the-straits-times-index-soar-to-new-highs-in-2025/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"FSTM.SI":"富时海峡中盘指数","C38U.SI":"凯德商用新加坡信托","LU2242652126.USD":"FIDELITY FUNDS GLOBAL DIVIDENDS PLUS \"A\" (USD) INC","ES3.SI":"STI ETF","STI.SI":"富时新加坡海峡指数","BK6033":"金融交易所和数据","BK6523":"ESG概念","LU1497734951.SGD":"Eastspring Investments - Asian Low Volatility Equity Fund ASDM SGD-H","O39.SI":"华侨银行","D05.SI":"星展集团控股","LU0762541174.USD":"HSBC GIF MANAGED SOLUTIONS ASIA FOCUSED INCOME \"AM2\" (USD) INC","LU1119993845.HKD":"FIDELITY ASIA PACIFIC DIVIDEND \"A\" (HKDHDG) INC","SG9999013478.USD":"利安新加坡股息基金","SG9999000343.SGD":"Schroder Singapore Trust A Dis SGD","IE0009570106.USD":"FSSA ASIA OPPORTUNITIES \"I\" (USD) ACC","LU0577902454.USD":"FULLERTON LUX FUNDS - ASIA GROWTH & INCOME EQUITIE \"I\" (USD) ACC","SG9999002562.SGD":"LionGlobal Asia Pacific SGD","LU0588545730.USD":"EASTSPRING INVESTMENTS ASIAN EQUITY INCOME \"ADM\" (USD) INC","U11.SI":"大华银行","LU1242518857.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"I\" (USD) ACC","SG9999001689.USD":"施罗德亚洲成长股票","LU0543330483.HKD":"TEMPLETON ASIAN GROWTH \"A\" (HKD) ACC","LU0882747503.HKD":"UBS (LUX) KEY SELEC ASIA ALLOCATION OPPORTUNITY (USD) \"P\" (HKD) INC","LU0048597586.USD":"富达亚洲焦点A","CFA.SI":"NikkoAM-STC Asia REIT","LU0163747925.USD":"EASTSPRING INVESTMENTS ASIAN EQUITY A ACC","SG9999013486.USD":"LIONGLOBAL SINGAPORE DIVIDEND EQUITY (USD) INC A","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","LU0823417653.USD":"BNP PARIBAS SUSTAINABLE GLOBAL LOW VOL EQUITY \"C\" (USD) ACC","LU0384037296.USD":"ALLIANZ ASIAN MULTI INCOME PLUS \"AT\" (USD) ACC","LU0251143029.SGD":"Fidelity ASEAN A-SGD","BK6111":"工业集团企业","LU1242518931.SGD":"Fullerton Lux Funds - Asia Absolute Alpha A Acc SGD","LU0630378692.HKD":"HSBC GIF ASIA PACIFIC EX JAPAN EQ HD \"AM2\" (HKD) INC","LU0955669360.SGD":"Schroder ISF Asian Dividend Maximiser A Dis SGD","BN4.SI":"吉宝有限公司","SGXZ24219693.SGD":"UNITED SG DYNAMIC INCOME FUND \"A\" (SGD) INC","LU1920063259.USD":"FIDELITY FUNDS GLOBAL DIVIDEND PLUS \"A\" (USDHDG) INC","LU0821914370.USD":"贝莱德亚洲成长领袖A2","LU0955623706.USD":"SCHRODER ISF ASIAN DIVIDEND MAX \"A\" (USD) ACC","BK6112":"综合性银行","BK6133":"工业房地产信托","LU0192582467.USD":"SCHRODER ISF ASIAN EQUITY YIELD \"A\" (USD) INC MF","LU0831103253.SGD":"JPMorgan Funds - Asia Pacific Income A (mth) SGD","A17U.SI":"凯德腾飞房产信托","SG9999003826.SGD":"日兴资管新加坡股息基金 SGD","SG9999016042.SGD":"Schroder Singapore Trust A Acc SGD","FSTAS.SI":"富时海峡全股指数","Z74.SI":"新电信","S68.SI":"新加坡交易所"},"source_url":"https://thesmartinvestor.com.sg/can-the-straits-times-index-soar-to-new-highs-in-2025/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2492865903","content_text":"Investors with money parked in Singapore equities are a happy bunch this year.The Straits Times Index, or STI, has outperformed many Asia-Pacific markets in the past two years and gained over 16% as of 3 December 2024.This puts the index at a 17-year high even as it touches the 3,822 level, and is just shy of its all-time high of 3,906 achieved back in October 2007.Amid the bullish mood, investors may wonder if the index is poised to surpass its all-time high next year.Let’s break the index down into its major components to assess if there is a high probability of this happening.Banks are leading the wayFirst off, investors should note that more than half of the STI is comprised of the three local banks, namely DBS Group, OCBC Ltd, and $United Overseas Bank(U11.SI), or UOB.DBS, being Singapore’s largest bank, takes up nearly a quarter of the index’s weight while OCBC and UOB had weights of 16.3% and 12.6%, respectively.Together, the trio of banks occupied 53% of the STI’s value as of 29 November 2024.For this year, these banks are responsible for powering the index to its 17-year high.All three banks have hit their all-time highs amid a flurry of strong financial results brought about by surging interest rates.The question is whether these banks can continue to do well in 2025 to help the index climb further.For DBS, CEO Piyush Gupta thinks that net interest income (NII) will hover around 2024 levels as a decline in net interest margins will be offset by higher loan growth.Non-interest income, however, should see high-single-digit year-on-year growth.UOB’s CEO, Wee Ee Cheong, projects high single-digit loan growth and double-digit fee income growth for the lender next year.OCBC did not provide any guidance for 2025 but back in May this year, CEO Helen Wong announced that the bank will invest HK$1.5 billion over the next three years to modernise its technology platforms, channels, and products.There is an overall positive tone coming from the three banks as they believe that interest rates should hover around current levels or be slightly lower.The US Federal Reserve is likely to go through with its third consecutive rate cut for 2024 when it convenes on 18 December.However, experts believe that there will be a slower pace of rate cuts in 2025 as inflation has proven sticky and with the new President-Elect Donald Trump’s policies being inflationary, too.Singtel introduces its value realisation dividendSingtel is the next stock after UOB in terms of weight and contributes 6.6% to the index’s value.The telco has done well since it introduced its strategic reset back in 2021.For its recent first half of fiscal 2025 (1H FY2025) earnings, revenue stayed flat year on year but operating profit climbed 27% year on year to S$738 million, led by its Optus and NCS divisions.The group’s underlying net profit improved by 6% year on year to S$1.2 billion.The good news is that the interim dividend rose to S$0.07, higher than the prior year’s S$0.052, and comprises a value realisation dividend (VRD) of S$0.014 along with a core dividend of S$0.056.Since Singtel’s reset, the telco has raised its annual dividends without fail since FY2021.The new VRD is funded from excess capital churned out by its asset recycling programme and will range from S$0.03 to S$0.06 per year.With new targets for capital recycling along with improvements in core underlying net profit, Singtel looks well-positioned to continue growing in 2025 and beyond.Robust REIT candidatesLet’s not forget that the REITs also show promise despite a tepid 2024 that saw the sector get hit by higher finance costs and inflationary pressures.CapitaLand Integrated Commercial Trust, or CICT, takes up close to 3% of the index and is the largest REIT listed on the stock exchange.CapitaLand Ascendas REIT, or CLAR, comes in close with a 2.7% weight.CICT posted a healthy performance for the first nine months of 2024 as gross revenue rose 2% year on year and net property income increased by 5.4% year on year.CLAR just announced its first sale and leaseback transaction with DHL USA for S$150.3 million which is yield-accretive and will bolster its US portfolio.Other promising companiesAside from the six stocks mentioned above, other promising candidates can benefit from the STI.Keppel Ltd occupies a 2.65% weight within the index and the asset manager has done well for 9M 2024.Although net profit was comparable year on year, recurring income grew 14% year on year for 9M 2024 as the group continued growing its funds under management.Singapore Exchange Limited, or SGX, takes up 3% of the index’s value and the bourse operator reported an encouraging result for its fiscal 2024 ending 30 June 2024.Revenue inched up 3.1% year on year to S$1.2 billion while net profit (excluding exceptional items) increased by 4.5% year on year to S$525.9 million.The exchange also upped its quarterly dividend from S$0.085 to S$0.09.Looking ahead, management aims to grow the group’s revenue by 6% to 8% per annum in the medium term.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":3,"commentSize":1,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492865903"}