STI ETF a.k.a. SPDR Straits Times Index ETF

[edragon]

Hi BigToe,

STI under 2000 (2008/2009) was on a back of a deep recession triggered by GFC2008. So we could reasonably assume valuations were depressed. STI at 4500 (2025) has been lifted by a few tailwinds and the biggest component stock DBS has a book value multiple that is almost similar to US's biggest bank JP Morgan Chase. So while it is pointless to predict the next 15 years, both situations probably don't have the same context to start with.

On another note, I read somewhere a comment that the Spore government and its agencies have a strong ability to be able to execute. So with the current direction being set on reviving the equity market so that it doesn't stay as the "sick man" of Spore capital markets, participants are been dealt with favorable cards.

Indeed lifted by tailwinds and may it blow until year 2030?
STI February 3826.47 to October 4428.62 (+15.7%) 
What is the ultimate height of these billion$ wind? Will there be a second, third, fourth and fifth tranche? 

[EnSabahNur]

What is the ultimate height of these billion$ wind? Will there be a second, third, fourth and fifth tranche

i think the total size is 5 billion and 1.1 billion has been deployed.

I get your point, I'm not sure how this will result in a more permanent uplift in the valuations here.

[edragon]

STRAITS TIMES INDEX
11-Oct-2007 3,875.77 Previous High
10-Feb-2025 3,875.13 Finally!
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17.35 Years
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Better Late than Never 

[swakoo]

To have a better grasp on the DBS forecast of STI potential target of 10K by 2040, take a look at their very detailed analysis (caution - very long read):

  Sg Equity Mkt - Riding the Liquidity Wave by Yeo Kee Yan.pdf (Size: 2.62 MB / Downloads: 8)

The target is driven not just by assumptions of EPS/DPS growth but also valuation uplift catalysts (eg. MAS initiatives, safe haven inflows, etc.). And also based on an examination of STI history over past many years. A multi-faceted forecast.

[Big Toe]

Let's be realistic, it's hard enough to forecast what's going to happen to a company a few years from now. This is not just a sector but the entire STI. It doesnt matter how detailed it is, whether 17 pages or 500 pages, the chances of getting it precisely right is very slim. And to a larger extent, even if all the stars align and he gets it right, STI alone does not reflect the entire state of Singapore Economy.

Having said that, I do agree that STI is probably going to do relatively well mainly due to valuation uplift and the government giving the equity market a boost. Also Singapore does not have a debt problem unlike most countries, which enables us to spend on growth instead of servicing debt. As for growth companies being added to the STI, as far as I can see, probably SEA Ltd(if there is a dual listing, but if I am SEA Ltd, unless incentives are appealing, why even bother?) and Ifast.

[swakoo]

Let's be realistic, it's hard enough to forecast what's going to happen to a company a few years from now. This is not just a sector but the entire STI. It doesnt matter how detailed it is, whether 17 pages or 500 pages, the chances of getting it precisely right is very slim.

Thanks for your thoughts.

The author of the forecast is realistic enough to present 3 forecast scenarios. But there is no need to get it precisely right. Think the value of the forecast lies in the degree of plausibility or quality of the rationale for the forecast. Is there method to the madness (of a seemingly audacious forecast)? To let the reader judge for themselves and perhaps make adjustments based on their own thinking.

And if enough people believe in the rationale, it could become a self fulfilling prophecy especially wrt the valuation uplift catalyst. Conversely if irrational pessimism (opposite of irrational exuberance) prevails, the market will be forever stuck in valuation depression.

And to a larger extent, even if all the stars align and he gets it right, STI alone does not reflect the entire state of Singapore Economy.

Don't think the author of STI forecast was attempting to describe the entire Sg economy. For that, there are other authors - see the full DBS report (extremely long but interesting) - click on "download pdf" in this link:

Singapore 2040: The next 15 years of quality and inclusive growth

Having said that, I do agree that STI is probably going to do relatively well mainly due to valuation uplift and the government giving the equity market a boost. Also Singapore does not have a debt problem unlike most countries, which enables us to spend on growth instead of servicing debt.

Yes. And SORA and 10 year sovereign bond trends seem to suggest Sg exceptionalism is prevailing, with safe haven inflows.
   
   

As for growth companies being added to the STI, as far as I can see, probably SEA Ltd(if there is a dual listing, but if I am SEA Ltd, unless incentives are appealing, why even bother?) and Ifast.

See the self fulfilling prophecy thingy above.

[edragon]

11-Oct-2007 3,875.77 S$1 = US$ 0.6844
10-Feb-2025 3,875.13 S$1 = US$ 0.7378 +7.8%

And, 0% CGT as 17 years is NOT trading income at all.
At the very least, your foreign currency capital have appreciated. 
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[specuvestor]

One of the problem that STI doesn't look attractive is because the banks and REITS are high dividend paying

From 11 Oct 2007 to 10 Feb 2025 the price return is 1.15% according to Bloomberg but total return with dividend is actually 87.77%

That actually also tells us the case for investing in cashflow companies