ST Index leads Asian bourses in payouts

SGX market strategist Geoff Howie said the STI's annualised total return over the last 10 years stood at 7.8 per cent, topping the Hang Seng's 7.6 per cent and the Dow Jones' 5.9 per cent.
SGX market strategist Geoff Howie said the STI's annualised total return over the last 10 years stood at 7.8 per cent, topping the Hang Seng's 7.6 per cent and the Dow Jones' 5.9 per cent.PHOTO: REUTERS

Its companies posted overall dividend yield of 3.4% for H1 - well above Asia average of 2.3%

The Straits Times Index (STI) still leads the pack among benchmark stock indices in Asia when it comes to attractive payouts, according to Singapore Exchange (SGX) market strategist Geoff Howie.

The 30 companies making up the STI had posted an overall dividend yield of 3.4 per cent for the first half of this year - well above the Asia average of 2.3 per cent, he told a media briefing yesterday.

Bloomberg data showed Taiwan's Taiex came in a close second with a dividend yield of 3.3 per cent as at July 1, while that of Hong Kong's Hang Seng Index was at 3.1 per cent.

The Nikkei 225 Index in Japan had a dividend yield of 1.4 per cent - less than half the STI's.

The STI comprises 30 large stocks from five sectors - consumer discretionary, consumer staples, financials, industrials and telecommunication. Its positive performance was led by counters such as Hutchison Port Holdings Trust, Ascendas Real Estate Investment Trust (Reit), Keppel Corporation and Sembcorp Industries, which had the highest indicative yields, Mr Howie said.

He noted that the expansion of the Reit sector had helped to increase the yield of the average STI stock. "Amidst the recent low interest rate environments, there has been a global appetite for yield," he said.

"Investors here still have a very high interest in dividends, which plays to our strengths."

Mr Howie added that the STI's annualised total return over the last 10 years stood at 7.8 per cent, topping the Hang Seng's 7.6 per cent, the Dow Jones Industrial Average's 5.9 per cent, as well as the Nikkei 225's 4.1 per cent.

At the same time, the traded value of exchange-traded funds grew 37 per cent year-on-year for the period of January to July.

IG market strategist Bernard Aw, however, noted that current market conditions have become "unfavourable" for Singapore stocks.

"There's been a lack of interest in Singapore stocks - the absence of initial public offerings on the mainboard is telling of that."

He noted that the STI saw a reversal in April after reaching a high of 3,539.95 points, switching to a downtrend, before going under heavy selling pressure in the middle of last month. This means the STI is down 8.85 per cent so far this year.

"Investors and companies alike don't see a lot of liquidity in Singapore at this point in time," said Mr Aw. "They prefer to trade in Hong Kong or China instead, even in the United States."

A version of this article appeared in the print edition of The Straits Times on August 18, 2015, with the headline 'ST Index leads Asian bourses in payouts'. Print Edition | Subscribe