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Straits Times Index constituents May 2017 performance

Straits Times Index delivers strong end of May 2017 performance up 1.1% from April but market breadth declines from previous month. 15 companies end positive, 15 in the red. Yangzijiang Shipbuilding and OCBC are gain leaders. Comfortdelgro is top loser.

 

End of May 2017 performance by STI constituents

  1. Straits Times Index finished May 2017 at 3210.82, up 1.1% from end April.
  2. 15 companies end the month positive, 15 companies in the red.
  3. Yangzijiang Shipbuilding, OCBC and Genting Singapore are gain leaders with YZJ up 10.4%. These three performed positively in April as well.
  4. Loss leaders are ComfortDelgro, Singapore Press Holdings and Jardine Cycle and Carriage. ComfortDelgro’s 12.4% loss is a huge swing from April’s positive 7% performance.
Straits Times Index constituents end-of-May 2017 performance

Straits Times Index constituents end-of-May 2017 performance | Screencap: Sginvestors.io

 

Declining market breadth

Compare this with April and end-Q1 performance:

  • End Q1 performance – STI up 10.22%, 27 stocks advanced, 3 declined.
  • End of April performance – STI up 0.01%, 19 stocks advanced, 11 declined.

 

Although end of May STI is positive, the number of losers increased. In my April post, I brought up the concept of Market Breadth.

How much the STI goes up or down is not the only indicator of a health stock market. Market breadth is equally important. Market breadth describes the number of companies that are advancing versus declining. An advancing index accompanied by strong number of advancers is healthy. An advancing index accompanied by strong number of decliners shows bearish divergence.

STI can continue it’s positive performance, lifted by the heavy weights Jardine Strategic, Singapore Telecom and DBS Holdings. However if decliners continue to increase, it is a bearish signal to investors because positive performance and sentiment is not shared by the rest of the market.

Top 10 components of the STI by market capitalisation on 02 June 2017

Top 10 components of the STI by market capitalisation on 02 June 2017 | Screencap: Tradingeconomics.com

 

As mentioned before, there were 24 decliners out of 30 STI components at end of Q2 2015 which could be a red flag and contributing factor for the crash in August. (Note: August market crash was a global phenomenon so some could argue that the Singapore stock market was affected by contagion. Nevertheless, the fact is market breadth is not a new concept and end of Q2 2015 performance spelled a huge negative for STI. In other words, STI was ripe for action.)

 

So summary, keep an eye look out for bad internal health even if the index is doing well.

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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