Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

Capitaland Commercial Trust / Equity Bottom-Up

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The STI Reserve List is used in the event that one or more of the STI constituents are deleted between quarterly reviews. The STI Reserve List was recently used on 19 Oct, with Keppel DC REIT joining the STI immediately after CapitaLand Commercial Trust’s deletion from the STI 
	 </li>
	<li>
Although the STI Reserve List is updated quarterly, investing in the STI Reserve List as it stood at the end of 2019, with equal weightage to the five stocks has so far generated a 2% decline in total return in 2020, compared to the STI’s decline of 7% 
	 </li>
	<li>
Using the same approach for the preceding years of 2016 through to 2019 generated mixed results, from the end of 2017 STI Reserve List averaging an 11% decline in 2018 (vs. STI 7% decline), to the end of 2018 STI Reserve List averaging a 33% return in 2019 (vs. 9% STI gain). 
	 </li>
	<li>The current STI Reserve List is made up of Frasers Logistics &amp; Commercial Trust, Suntec REIT, NetLink NBN Trust and Keppel REIT and is scheduled to be updated with the next quarterly review results, to be published after the 3 Dec close. </li>
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With a 19.3% price gain, for the month of November through to 24 Nov, the Straits Times Index (“STI”) was the best performing stock benchmark across Asia Pacific. The Stock Exchange of Thailand SET Index was a close second with returns of 18.3%, followed by the Korea Stock Exchange KOSPI gaining 16.2%. As noted in this week’s SGX My Gateway report (click <a href="http://edm.sgx.com/a/hBfu3oZB86%24MfB93ai1AAApi2NR/link1?t_params=k5wKqGB8J44s3q6h5XgUCMwV166qId-sUmYg72Kli5rTl8-5AyJ21vtaqsVup8UBwde4bzG3DeX%245t8GHGjyeaU">here</a>) this is to date the strongest month for the STI since it posted a 21% gain in May 2009. Moreover, the month’s gains have brought the STI’s 2020 year-to-date decline in total return to 6.6%.   
An element of the STI that has performed comparatively defensively in the 2020 year to 24 Nov was the STI Reserve List, as it stood at the end of 2019, with the five stocks averaging a 1.7% decline in total return. The STI Reserve List 

The STI Reserve List is used in the event that one or more of the STI constituents are deleted in between quarterly reviews. The five stock list was last activated on 19 October when CapitaLand Commerical Trust was deleted from the STI. Prior to this, the list was used on 5 January 2017 when Venture Corporation joined the STI after Global Logisitcs Properties was deleted from the Index. As detailed in the STI Ground Rules, when a stock is going to be removed from the STI, the vacancy will be filled by selecting the highest ranking security by full market value in the STI Reserve List as at the close of the index calculation two days prior to the deletion. 
Keppel DC REIT’s recent STI inclusion means that there are currently four STI Reserve List stocks that will be topped back up to five stocks at the next quarterly rebalance. The results of the next rebalance are scheduled for release on 3 December. The current STI Reserve List is made up of Frasers Logistics &amp; Commercial Trust, Suntec REIT, NetLink NBN Trust and Keppel REIT. With the dynamic market moves since the end of September, some old and new names may appear in the Index, such as Olam International (an ex-STI constituent) or Frasers Centrepoint Trust, however this will depend on their comparative market capitalisation on the day of the review. Portfolio Applications of the STI Reserve List 
The STI Reserve List is updated on a quarterly basis, hence investors that choose to follow the list to a tee would need to also rebalance their basket of STI Reserve List stocks on a quarterly basis. There is no mini-Index that exclusively follows the five stocks.

 
Alternatively, investors may choose to be less active with the STI Reserve List or apply shorter-time frames. For instance, at the end of 2019, an investor may have chosen to invest in the STI Reserve List, balancing the exposure across each of the five stocks, with the intention of holding the investment through to the end of 2020. This means the investor would not alter the holdings of the five stocks with any STI Reserve List changes posted in the March, June, September and December in the reviews, rather the investor would have simply look to hold the original position for a fixed period of time.  
Similarly at the end of June 2019, the investor may have chosen to invest in the five STI Reserve List stocks as they stood at the end of June 2019, and hold these stocks for six months, through to the end of December 2019 or 12 months, through to June 2020. These are just a few of simple educative examples of the investing application of the STI Reserve List. 
Elaborating on the first example, the five STI Reserve List stocks at the end of 2019 were Suntec REIT, Mapletree Industrial Trust, 
Keppel REIT, Mapletree North Asia Commerical Trust and NetLink NBN Trust. Had the investor maintained equal exposure to these five stocks in the 2020 year through to 24 November the decline in total return would have come to 1.7%. This was a more defensive than the STI which generated a decline of 6.6% over the period.

<table class="table table-striped"><tbody>
<tr>
<td>
			STI Reserve List as of the End of 2019
			</td>
			<td>
			2020 YTD 

			Total Return (%)
			</td>
		</tr>
<tr>
<td>
			Suntec REIT
			</td>
			<td>
			-12.0
			</td>
		</tr>
<tr>
<td>
			MIT
			</td>
			<td>
			20.9
			</td>
		</tr>
<tr>
<td>
			Keppel REIT
			</td>
			<td>
			-11.3
			</td>
		</tr>
<tr>
<td>
			MNACT
			</td>
			<td>
			-14.9
			</td>
		</tr>
<tr>
<td>
			NetLink NBN Trust
			</td>
			<td>
			8.6
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			-1.7
			</td>
		</tr>
<tr>
<td>
			STI
			</td>
			<td>
			-6.6
			</td>
		</tr>
</tbody></table>
 

Applying the same approach to recent years has seen two years of STI Reserve List underperfomance to the STI, and two years of outperformance. The biggest difference was in 2019, when the five stocks of the STI Reserve List as of the end of 2018 averaged 33.1% total returns in 2019, more than three times the STI’s total return of 9.1% in 2019. The two instances of underperfomance were when the STI Reserve List as of the end of 2016 averaged a 15.4% gain in 2017, compared to a 22.0% gain of the STI, and when the STI Reserve List as of the end of 2017 averaged an 11.1% decline in 2018, compared to a 6.5% decline for the STI. 
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-11/Total%20Return_0.PNG' alt='Total Return' />
 </figure>
 <div class='content-caption'>Total Return</div>
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<tr>
<td>
			STI Reserve List as of end of 2015
			</td>
			<td>
			2016 Total Return (%)
			</td>
			<td>
			STI Reserve List as of end of 2016
			</td>
			<td>
			2017 Total Return (%)
			</td>
			<td>
			STI Reserve List as of end of 2017
			</td>
			<td>
			2018 Total Return (%)
			</td>
			<td>
			STI Reserve List as of end of 2018
			</td>
			<td>
			2019 Total Return (%)
			</td>
		</tr>
<tr>
<td>
			Singapore Post
			</td>
			<td>
			-6.6
			</td>
			<td>
			Suntec REIT
			</td>
			<td>
			37.6
			</td>
			<td>
			Venture Corp
			</td>
			<td>
			-29.0
			</td>
			<td>
			Suntec REIT
			</td>
			<td>
			8.9
			</td>
		</tr>
<tr>
<td>
			Suntec REIT
			</td>
			<td>
			13.2
			</td>
			<td>
			MCT
			</td>
			<td>
			23.0
			</td>
			<td>
			Suntec REIT
			</td>
			<td>
			-13.0
			</td>
			<td>
			MCT
			</td>
			<td>
			52.6
			</td>
		</tr>
<tr>
<td>
			CCT
			</td>
			<td>
			16.6
			</td>
			<td>
			Keppel REIT
			</td>
			<td>
			30.1
			</td>
			<td>
			MCT
			</td>
			<td>
			7.6
			</td>
			<td>
			Keppel REIT
			</td>
			<td>
			13.8
			</td>
		</tr>
<tr>
<td>
			First Resources
			</td>
			<td>
			0.0
			</td>
			<td>
			First Resources
			</td>
			<td>
			0.4
			</td>
			<td>
			Keppel REIT
			</td>
			<td>
			-5.2
			</td>
			<td>
			MLT
			</td>
			<td>
			46.2
			</td>
		</tr>
<tr>
<td>
			NOL*
			</td>
			<td>
			5.7
			</td>
			<td>
			Singapore Post
			</td>
			<td>
			-14.1
			</td>
			<td>
			Sembcorp Marine
			</td>
			<td>
			-16.0
			</td>
			<td>
			MIT
			</td>
			<td>
			43.9
			</td>
		</tr>
<tr>
<td>
			 Average
			</td>
			<td>
			5.8
			</td>
			<td>
			 
			</td>
			<td>
			15.4
			</td>
			<td>
			 
			</td>
			<td>
			-11.1
			</td>
			<td> </td>
			<td>
			33.1
			</td>
		</tr>
<tr>
<td>
			 STI
			</td>
			<td>
			3.8
			</td>
			<td>
			 
			</td>
			<td>
			22.0
			</td>
			<td>
			 
			</td>
			<td>
			-6.5
			</td>
			<td>
			 
			</td>
			<td>
			9.4
			</td>
		</tr>
</tbody></table>
 *note return through to 18 July 2016. Source: SGX Stockfacts, Bloomberg, Refinitiv (Data as of 24 November)
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The STI Reserve List is used in the event that one or more of the STI constituents are deleted between quarterly reviews. The STI Reserve List was recently used on 19 Oct, with Keppel DC REIT joining the STI immediately after CapitaLand Commercial Trust’s deletion from the STI 
	 
	
Although the STI Reserve List is updated quarterly, investing in the STI Reserve List as it stood at the end of 2019, with equal weightage to the five stocks has so far generated a 2% decline in total return in 2020, compared to the STI’s decline of 7% 
	 
	
Using the same approach for the preceding years of 2016 through to 2019 generated mixed results, from the end of 2017 STI Reserve List averaging an 11% decline in 2018 (vs. STI 7% decline), to the end of 2018 STI Reserve List averaging a 33% return in 2019 (vs. 9% STI gain).  
	 
	The current STI Reserve List is made up of Frasers Logistics &amp; Commercial Trust, Suntec REIT, NetLink NBN Trust and Keppel REIT and is scheduled to be updated with the next quarterly review results, to be published after the 3 Dec close. 

 

With a 19.3% price gain, for the month of November through to 24 Nov, the Straits Times Index (“STI”) was the best performing stock benchmark across Asia Pacific. The Stock Exchange of Thailand SET Index was a close second with returns of 18.3%, followed by the Korea Stock Exchange KOSPI gaining 16.2%. As noted in this week’s SGX My Gateway report (click here) this is to date the strongest month for the STI since it posted a 21% gain in May 2009. Moreover, the month’s gains have brought the STI’s 2020 year-to-date decline in total return to 6.6%.    
An element of the STI that has performed comparatively defensively in the 2020 year to 24 Nov was the STI Reserve List, as it stood at the end of 2019, with the five stocks averaging a 1.7% decline in total return.  The STI Reserve List 

The STI Reserve List is used in the event that one or more of the STI constituents are deleted in between quarterly reviews. The five stock list was last activated on 19 October when CapitaLand Commerical Trust was deleted from the STI. Prior to this, the list was used on 5 January 2017 when Venture Corporation joined the STI after Global Logisitcs Properties was deleted from the Index. As detailed in the STI Ground Rules, when a stock is going to be removed from the STI, the vacancy will be filled by selecting the highest ranking security by full market value in the STI Reserve List as at the close of the index calculation two days prior to the deletion.  
Keppel DC REIT’s recent STI inclusion means that there are currently four STI Reserve List stocks that will be topped back up to five stocks at the next quarterly rebalance. The results of the next rebalance are scheduled for release on 3 December. The current STI Reserve List is made up of Frasers Logistics &amp; Commercial Trust, Suntec REIT, NetLink NBN Trust and Keppel REIT. With the dynamic market moves since the end of September, some old and new names may appear in the Index, such as Olam International (an ex-STI constituent) or Frasers Centrepoint Trust, however this will depend on their comparative market capitalisation on the day of the review.  Portfolio Applications of the STI Reserve List   
The STI Reserve List is updated on a quarterly basis, hence investors that choose to follow the list to a tee would need to also rebalance their basket of STI Reserve List stocks on a quarterly basis. There is no mini-Index that exclusively follows the five stocks.

 
Alternatively, investors may choose to be less active with the STI Reserve List or apply shorter-time frames. For instance, at the end of 2019, an investor may have chosen to invest in the STI Reserve List, balancing the exposure across each of the five stocks, with the intention of holding the investment through to the end of 2020. This means the investor would not alter the holdings of the five stocks with any STI Reserve List changes posted in the March, June, September and December in the reviews, rather the investor would have simply look to hold the original position for a fixed period of time.   
Similarly at the end of June 2019, the investor may have chosen to invest in the five STI Reserve List stocks as they stood at the end of June 2019, and hold these stocks for six months, through to the end of December 2019 or 12 months, through to June 2020. These are just a few of simple educative examples of the investing application of the STI Reserve List.  
Elaborating on the first example, the five STI Reserve List stocks at the end of 2019 were Suntec REIT, Mapletree Industrial Trust,  
Keppel REIT, Mapletree North Asia Commerical Trust and NetLink NBN Trust. Had the investor maintained equal exposure to these five stocks in the 2020 year through to 24 November the decline in total return would have come to 1.7%. This was a more defensive than the STI which generated a decline of 6.6% over the period.




			STI Reserve List as of the End of 2019
			
			
			2020 YTD 

			Total Return (%)
			
		


			Suntec REIT
			
			
			-12.0
			
		


			MIT
			
			
			20.9
			
		


			Keppel REIT
			
			
			-11.3
			
		


			MNACT
			
			
			-14.9
			
		


			NetLink NBN Trust
			
			
			8.6
			
		


			Average
			
			
			-1.7
			
		


			STI
			
			
			-6.6
			
		

 

Applying the same approach to recent years has seen two years of STI Reserve List underperfomance to the STI, and two years of outperformance. The biggest difference was in 2019, when the five stocks of the STI Reserve List as of the end of 2018 averaged 33.1% total returns in 2019, more than three times the STI’s total return of 9.1% in 2019. The two instances of underperfomance were when the STI Reserve List as of the end of 2016 averaged a 15.4% gain in 2017, compared to a 22.0% gain of the STI, and when the STI Reserve List as of the end of 2017 averaged an 11.1% decline in 2018, compared to a 6.5% decline for the STI. 



      
    
    Total Return





			STI Reserve List as of end of 2015
			
			
			2016 Total Return (%)
			
			
			STI Reserve List as of end of 2016
			
			
			2017 Total Return (%)
			
			
			STI Reserve List as of end of 2017
			
			
			2018 Total Return (%)
			
			
			STI Reserve List as of end of 2018
			
			
			2019 Total Return (%)
			
		


			Singapore Post
			
			
			-6.6
			
			
			Suntec REIT
			
			
			37.6
			
			
			Venture Corp
			
			
			-29.0
			
			
			Suntec REIT
			
			
			8.9
			
		


			Suntec REIT
			
			
			13.2
			
			
			MCT
			
			
			23.0
			
			
			Suntec REIT
			
			
			-13.0
			
			
			MCT
			
			
			52.6
			
		


			CCT
			
			
			16.6
			
			
			Keppel REIT
			
			
			30.1
			
			
			MCT
			
			
			7.6
			
			
			Keppel REIT
			
			
			13.8
			
		


			First Resources
			
			
			0.0
			
			
			First Resources
			
			
			0.4
			
			
			Keppel REIT
			
			
			-5.2
			
			
			MLT
			
			
			46.2
			
		


			NOL*
			
			
			5.7
			
			
			Singapore Post
			
			
			-14.1
			
			
			Sembcorp Marine
			
			
			-16.0
			
			
			MIT
			
			
			43.9
			
		


			 Average
			
			
			5.8
			
			
			 
			
			
			15.4
			
			
			 
			
			
			-11.1
			
			 
			
			33.1
			
		


			 STI
			
			
			3.8
			
			
			 
			
			
			22.0
			
			
			 
			
			
			-6.5
			
			
			 
			
			
			9.4
			
		

 *note return through to 18 July 2016. Source: SGX Stockfacts, Bloomberg, Refinitiv (Data as of 24 November)



Frasers Logistics & Commercial Trust (FLT SP)

STI's 2019 Reserve List More Defensive than STI in 2020