• In 2022, the STI generated a 4.1% price gain, with dividend distributions boosting the total return to 8.4%. This was the strongest stock benchmark performance for the year across the Asia Pacific and Developed Indices, with the FTSE Asia Pacific Index and FTSE Developed Indices respectively declining 16.7% and 18.3% in total return.
   
• Index performances were attributed to multiple factors including sector composition and secular growth, in addition to broader regional and global economic themes. Multiple STI constituents also pressed on with strategic initiatives in 2022. Overarching themes for 2023 include slowing global growth and trade, and persistent above-trend inflation.
   
• For Singapore-listed ETFs, the STI remained the most traded index among ETF investors, with the two STI tracking ETFs recording a combined trading turnover of S$1.06 billion in 2022. Primary market unit creations and redemptions crossed S$553 million over the period.
   

The Straits Times Index (STI) generated a 4.1% price gain in 2022, with reinvested dividends bringing the total return to 8.4%. For much of the year, the STI was among the strongest stock market benchmarks across the globe, and for the majors finished the calendar year just 1.0% behind Brazil’s IBOVESPA Index. This means the STI well outpaced Indices across the Asia Pacific and Developed Economies across the globe over the year.  

The STI’s gain in 2022 brought the STI’s gain from the end of 2019 through to the 9 Jan 2023 Morning Session to 14.0%, outpacing a comparatively flat performing region, while marginally trailing the FTSE Developed Index total return of 18.0%.

Last year, the STI remained the most traded stock index among Singapore ETF investors, with the two STI tracking ETFs recording a combined trading turnover of S$1.06 billion in 2022. This was 25% higher than the next most traded index, the Hang Seng TECH Index which traded S$850 million over 2022. Primary market unit creations and redemptions for the two STI ETFs, crossed S$553 million over the period with fluid economic developments producing a close to 500-point range for the STI in 2022, up from near 440 points in 2021.

Index Drivers

For the 2022 year, the trio of DBS Group Holdings, Oversea-Chinese Banking Corporation and United Overseas Bank ended 2022 with a 46.9% weight in the STI. The trio averaged 13% total returns over the year. On the back of higher interest rates, the trio of banks have reported eight consecutive quarters of QoQ NII growth, with the combined 3Q22 NII at S$7.4 billion, up S$1.3 billion from 2Q22.

By comparison, the Bank Sector makes up 6.3% of the FTSE Developed Index and 7.3% of the FTSE All-World Index, which maintain the most Sector exposure to Technology, which was the least performing sector of 2022.

Aside from secular sector performances, growth outlooks also impacted index performances. For instance, while maintaining a 20% exposure to the Bank Sector and a 2% exposure to the Technology Sector, downward growth revisions for Asia’s largest economy saw the FTSE China A50 Index decline 22% in 2022. With risk management applications, the SGX FTSE China A50 Index Futures market generated record average daily trading turnover in 2022 for both the day and overnight sessions.

The USD/CNY also appreciated 15% over the first 10 months of 2022. The comparative strength of the Singapore Dollar to the US Dollar was also a contributing factor to the STI’s performance. The FTSE ASEAN All-Share Index which declined 6.8% in 2022 maintains a 31% weighting to Bank Sector, including an 11% combined weightage to DBS Group Holdings, Oversea-Chinese Banking Corporation and United Overseas Bank. While pressing higher for most of the year, the USD/SGD ended the year marginally lower at 1.34, whilst three countries that represent close to 60% of the FTSE ASEAN All-Share Index booked depreciations to the USD. The USD/THB ended the year up 4%, the USD/IDR ended the year up 9% and the USD/MYR ended the year up 6%.

In addition, since 2020, multiple corporates have engaged strategic initiatives to enhance operational efficiency and shareholder value. Such initiatives have involved acquisitions, disposals, significant share buybacks, restructuring or pivots to new revenue streams. This theme was also relevant to eight of the 10 strongest performing STI stocks that were listed for the full 2022 year.

*does not include net institutional flow for MNACT; **price and total return from 14 July 2022; ***2021 total return from 20 September 2021;

Source: SGX, Refinitiv, Bloomberg
 

Growth, trade, and inflation are the overarching macro themes for 2023, with the global stock and bond markets pricing in moderate recessionary pressures in 2023. Broad downside risks to the market in 2023 are twofold. Firstly, added global interest rate increases may further decelerate growth or exacerbate market volatility and financial stability risks. Secondly, there may be further escalation in global geopolitical tension.