Bank on Singapore

I recently visited Sentosa to take a look at the new casino and the Universal Studios. The first thought that came to my mind when I saw the Universal Studios globe was, “Singapore is really going to prosper from this!”. The casino was grand and the entire area around Waterfront station has been transformed to something spectacular. It wasn’t the Sentosa I used to know. The Sentosa IR and the Marina Bay Sands included will certainly bring Singapore the revenues. With the YOG coming up, F1 slated to happen in September and the economy outlook for this year being very positive for Singapore, I’m sure Singapore will be doing extremely well for the next few years to come. Recently, Singapore has also been ranked one of the best places to do business in due to the tax incentives, low crime rate, low corruption and high literacy rates.

To bank on Singapore, I recently bought the STI ETF. The Straits Times Index (STI) is the benchmark index the representative 30 companies in Singapore and it consists of some of the biggest players like DBS, Capitaland, SMRT, SGX, SIA, Singtel and Starhub, among others. When you buy 1 lot of STI ETF (or STI exchange traded fund), it’s like buying the entire STI with its 30 component stocks at one go for one price. You are entitled to the dividends paid by the component stocks as well. The dividend yield of STI ETF is around 4% and it’s better than putting the money in the bank and getting a paltry 0.1% as interest.

7 thoughts on “Bank on Singapore

  1. Hi,
    Where can I check the price and dividend payout for STI ETF?
    And the latest composition of its 30 component.

    Thanks much!

  2. Hi FFN,

    I’m not too familiar with Bloomberg portal. I’ve added DBSSTI:SP and STTF:SP to to Watchlist. At the 12mo Div. Yld. column, I see 2.313 for DBSSTI:SP and 3.546 for STTF:SP. Is this value in Percentage? Meaning, dividend yield per annum is around 2-3%?

    There are more than one STI ETF trading in SGX. I’ve randomly added 2 to begin with; DBSSTI:SP and STTF:SP. Are they all the same kind of product? Tracking STI Index? Why is dividend yield of 1 much higher than the other? Which ETF would you recommend?

    Thank you for answering to my questions.

    1. Hi,

      Yes, that’s the percentage value most probably. On the SGX, two ETFs tracking the STI are listed. One is from SPDR (http://www.spdrs.com.sg/etf/fund/fund_detail_STTF.html) and the other from Nikko AM (http://www.nikkoam.com.sg/nikko-am-singapore-sti-etf/fundprofile). Yes, they both track the STI index. For SPDR’s, 1 lot = 1000 shares but for Nikko AM’s, 1 lot = 100 shares. I’m not sure about the differing yields. You can look into it in the prospectus. I personally prefer SPDR as they have been around longer than Nikko AM. Nikko AM STI ETF was previously known as DBS STI ETF and the ETF came into being only around 2008 if I’m not wrong. SPRD has a longer history and it was known as Streettracks STI ETF previously.

      Hope this helps!

  3. Thanks FFN. You have been a great help. I’ve just opened an acc to trade SGX shares. As I”m not a local, starting with STI ETF would be a safer bet. I’ll continue to read your other posts about investing in Spore stocks. Fantastic blog you have here.

  4. I’m from KL. Recently, my brokerage introduced online trading platform for SGX, so it opened up an opportunity to trade in other markets. KLSE is quite over-valued, hard to get a bargain, esp for value investors.

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