Singapore: STI Index (.STI) announced some changes to the index

Singapore: STI Index (.STI) announced some changes to the index

Singapore: STI Index (.STI) announced some changes to the index

the co-creators of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI), announced some changes to the index as part of its September quarterly review.

The announcement also revealed the new STI reserve list. Companies on this list will replace any STI component that becomes ineligible due to corporate actions, before the next review.

With that, let’s look at the five STI reserve list components in order of market capitalisation.

Component #1: Suntec Real Estate Investment Trust (SGX: T82U)

Suntec Real Estate Investment Trust is the first composite real estate investment trust (REIT) in Singapore, owning both retail and office properties. Its portfolio includes Suntec City, a one-third interest in One Raffles Quay, a commercial building in Australia’s Sydney, and a 50% stake in Southgate Complex in Melbourne, Australia.

As of 30 June 2018, the portfolio committed occupancy stood at 99%, with the office occupancy at 99% and the retail component at 98.2%. Suntec REIT’s gearing was 37.9%, and it had an interest coverage ratio of 3.6 times.

Since the start of the year, units in Suntec REIT had fallen some 13%. However, there are reasons to be bullish about the REIT. Based on the closing price of S$1.87 yesterday, the REIT had a price-to-book (PB) ratio of 0.89 and a distribution yield of 5.3%.

Component #2: Mapletree Commercial Trust (SGX: N2IU)

Mapletree Commercial Trust is the owner of the largest shopping centre in Singapore, VivoCity, among other properties. You can check out the link here for a full list of properties owned by the REIT.

At the end of June 2018, the portfolio committed occupancy was 99.2%, with the actual occupancy at 96.4%. Mapletree Commercial Trust had a gearing ratio of 34.7%, the lowest among the REITs featured in this article. Its interest coverage was 4.6 times. For a full update on the REIT’s latest first quarter earnings, you can head here.

Yesterday, the REIT closed at S$1.62 per unit, giving a PB ratio of 1.09 and a distribution yield of 5.6%.

Component #3: Keppel REIT (SGX: K71U)

Keppel REIT invests in commercial properties in both Singapore and Australia. In our city-state, it owns Ocean Financial Centre (99.9% interest); Bugis Junction Towers (full interest); and a one-third stake in One Raffles Quay, Marine Bay Link Mall, and Marina Bay Financial Centre Towers 1, 2 and 3. In Australia, it has assets in Sydney, Melbourne, Brisbane and Perth.

As of end-June 2018, the REIT’s committed occupancy was 99.3%. The gearing ratio stood at 38.6% while the interest coverage ratio came in at 4.3 times.

In July and August this year, the REIT started buying back its units from the open market. In July, the REIT’s manager repurchased 3.5 million units of the REIT for a total amount of S$4.1 million. Last month, it bought back 1.8 million units for a total outlay of S$2.1 million.

The buybacks could be a signal to the market that the REIT’s units are undervalued. At a closing price of S$1.18 yesterday, Keppel REIT sported a PB ratio of 0.81 and a distribution yield of 4.8%.

Component #4: Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust (MLT) is the first Asia-focused logistics REIT to be listed in Singapore. The portfolio contains 134 properties, comprising assets in Singapore, Hong Kong, Japan, Australia, South Korea, China Malaysia and Vietnam.

MLT’s portfolio occupancy rate was 95.7%, as of 30 June 2018. As for its gearing, it came in at 36.4% with the interest cover ratio at 5.2 times.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 3,286.77.

The projected upper bound is: 3,207.45.

The projected lower bound is: 3,056.40.

The projected closing price is: 3,131.93.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black candles.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 9.2782. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 11 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 30.22. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 43 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -197.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed down -13.300 at 3,134.390. Volume was 7% below average (neutral) and Bollinger Bands were 16% narrower than normal.

Open High Low Close Volume___
3,133.9703,140.0303,119.8903,134.390 234,505,088

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 3,201.24 3,253.07 3,417.86
Volatility: 12 15 15
Volume: 220,624,048 234,449,664 243,363,664

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

STRAITS TIMES is currently 8.3% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of .STI (mildly bearish). Our trend forecasting oscillators are currently bearish on .STI and have had this outlook for the last 14 periods.

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