SINGAPORE (Aug 30): The benchmark Straits Times Index (STI) has generated a 13.2% price gain year to date (YTD) with its strongest-performing sectors being real estate, financials and industrials.

Out of these three sectors, STI’s eight real estate stocks averaging a 24.1% price gain while its 10 industrial stocks averaging a 13.6% price gain after experiencing declines averaging 0.5% and 5.2%, respectively, in 2016.

In the Aug 28 SGX My Gateway e-mail newsletter, market strategist Geoff Howie notes that valuations for stocks in these two sectors are mostly at, or above, historical standards, with real estate stocks averaging at about 1 time book and being marginally above the five-year average of 0.9 time.

The benchmark index’s four financial stocks, on the other hand, averaged a 15% price gain in the YTD.

Howie observes that all three banks in Singapore, which saw average price gains of 30.3%, maintained similar price-to-book (P/B) ratios at an average of 1.2 times – just 0.1 time above their five-year average of 1.1 times.

Meanwhile, the average price-to-equity (P/E) ratio for the 10 industrial stocks has significantly advanced to 20 times from a five-year average of 17 times, adds the bourse.

Among industrials, six of the stocks – Singapore Airlines (SIA), SIA Engineering, Hutchison Port Holdings Trust (HPHT), Yangzijiang Shipbuilding Holdings, Keppel Corporation, and ST Engineering currently have P/E ratios above their five-year average.

The P/B ratio of the real estate sector as at Monday YTD at 1 time is also marginally higher than its five-year average of 0.9 time, adds Howie.

Top performers among STI’s eight real estate stocks YTD are Global Logistic Properties (GLP), City Developments (CityDev) and UOL Group, all of which currently maintain P/B ratios above their five-year averages.  

“The Straits Times Index (STI) provides a benchmark gauge for the performance of Singapore’s 30 largest capitalised and actively traded stocks. The results of the next quarterly review for STI inclusion will be published on Thursday 31 August after the market close, and these results will be effective from the start of trading on Monday, 18 September,” says Howie.