STI ETF a.k.a. SPDR Straits Times Index ETF

[weijian]

STI at 10,000 by 2040: Which companies will do the heavy lifting?

The Straits Times Index just hit an all-time high above 4,400 this month. Then came the bold prediction by DBS Group’s research: 10,000 by 2040. Here’s the uncomfortable truth. Reaching that target will depend almost entirely on a select group of stocks. THE fate of Singapore’s stock market for the next 15 years rests on just 10 companies. That’s not hyperbole;  it’s math. But everyone’s asking the wrong question. It’s not whether the STI will hit 10,000; ask instead whether the underlying businesses can create enough value over the next 15 years to get there.

Let’s start with some math. Assuming the STI ends 2025 at around the 4,400 level, reaching 10,000 by 2040 would require an annual return of about 5.6 per cent. That’s achievable. According to DBS’ research, the index’s average total returns (including dividends) over a rolling 15-year period since 2000 have ranged between 6 per cent and 13.3 per cent.

The good news is that the banks have delivered. Over the past decade, all three grew their book value by between 5.7 and 6.1 per cent annually. Throw in their average dividend yield (excluding special dividends) of around 4.7 per cent, and you’re looking at total returns north of 10 per cent per year. That’s well above the 5.6 per cent target.

Over the past decade, Singtel’s earnings per share grew 4.8 per cent annually. Add its 4.6 per cent average dividend yield, and you’re looking at returns above nine per cent – comfortably beating the required growth.

The pandemic was hard on both Reits, especially CICT with its retail and office exposure. Then, rising rates stalled their recovery. Despite the headwinds, CICT has fought back impressively – delivering 6.4 per cent annual DPU growth since its 2020 low. CLAR’s DPU growth, however, was a mere 1.6 per cent.

SGX is projecting its annual dividend to jump from S$0.375 in FY2025 to S$0.525 by FY2028. That’s a 40 per cent increase in three years. Not to be outdone, STE is promising a near-six per cent dividend bump for 2025, followed by incremental increases equal to one-third of profit gains.

Keppel is betting on transformation, becoming a global asset manager with S$200 billion under management.  Jardine Matheson is playing the portfolio game through DFI Retail, HongKong Land and Jardine Cycle & Carriage. But step back from these individual stories and you’ll spot the pattern. Every single path to STI 10,000 is paved by dividends.

https://www.businesstimes.com.sg/wealth/...vy-lifting

In Nov2025, the MAS Review Group only talked about reducing board sizes of securities trading at >$10 from 100 to 10units. So I was surprised that the public consultation added the "$100" scenario. I suppose SGX expects a "$100 stock price company" in the not-too-long future.

And what a coincidence it nicely fits into the "STI at 10,000 by 2040" narrative by the potential " "$100 stock price company".  

SGX seeks public feedback on reduction of board lot sizes

The Singapore Exchange (SGX) on Friday (Jan 23) said that it is seeking feedback from the public on proposed changes to reduce the standard board lot size of certain instruments traded on the SGX.

The proposed changes are:

• A reduction in the standard board lot size from 100 units to 10 units, for instruments priced above S$10 and up to S$100.
  
• A reduction in the standard board lot size from 100 units to one unit, for instruments priced above S$100.
  

https://www.businesstimes.com.sg/compani...-lot-sizes

[EnSabahNur]

Wouldn't this cause some confusion when the prices are hovering around 10 or 100?

Example, iFast recently crossed the 10 dollars mark. So trading orders will be entered differently based on the price of the day?

I am not sure if there are other exchanges elsewhere that does this. IF this is a unique to SGX practice, I am not sure how trading platforms feel about spending money to enhance their systems for such a weird practice.

[weijian]

Wouldn't this cause some confusion when the prices are hovering around 10 or 100?

Example, iFast recently crossed the 10 dollars mark. So trading orders will be entered differently based on the price of the day?

I am not sure if there are other exchanges elsewhere that does this. IF this is a unique to SGX practice, I am not sure how trading platforms feel about spending money to enhance their systems for such a weird practice.

Hi EnSabahNur,

It doesn't really affect those who have slightly bigger sums to invest or trade less often than brokers desire. In addition, I believe the coding of these changes into the trading platform makes the system "fail safe". For example, you wouldn't be able to enter a 9.95sgd bid for 10lots.

There are different minimum bid-ask spreads based on price and that is also coded into the trading platform making it "fail safe" too.

So in essence, I suppose any sort of confusion is minimal.

[weijian]

Wouldn't this cause some confusion when the prices are hovering around 10 or 100?

Example, iFast recently crossed the 10 dollars mark. So trading orders will be entered differently based on the price of the day?

I am not sure if there are other exchanges elsewhere that does this. IF this is a unique to SGX practice, I am not sure how trading platforms feel about spending money to enhance their systems for such a weird practice.

Hi EnSabahNur,

It doesn't really affect those who have slightly bigger sums to invest or trade less often than brokers desire. In addition, I believe the coding of these changes into the trading platform makes the system "fail safe". For example, you wouldn't be able to enter a 9.95sgd bid for 10lots.

There are different minimum bid-ask spreads based on price and that is also coded into the trading platform making it "fail safe" too.

So in essence, I suppose any sort of confusion is minimal.

I went to read the actual consultation paper. It seems like the implementation is not "automatic" when share price meets the threshold. Rather the entire implementation is similar to the STI index constituent review process --> (1) Review historical price trends --> (2) Announce the changes (if any) on a quarterly basis --> (3) Implement the changes thereafter.

In addition, once the board size is reduced. It does not go back to the previous bigger board size even if the share price subsequently drops and fails the threshold again. I suppose this reduces the confusion especially when we are dealing with bonus/share split situations.

Changes to market structure for SGX securities market

https://api2.sgx.com/sites/default/files...nal%5D.pdf

[swakoo]

The proposed changes are:

• A reduction in the standard board lot size from 100 units to 10 units, for instruments priced above S$10 and up to S$100.
  
• A reduction in the standard board lot size from 100 units to one unit, for instruments priced above S$100.
  

There is potential collateral damage from this proposal.

Most, if not all, mobile trading apps have very tiny fonts. Probably developed by Gen Z software people who may not realise that Sg is now a super-aged population, whose baby boomers are afflicted with presbyopia. And have great difficulty reading the tiny fonts (even with the limited re-sizing, if available).

The format for bid and ask size typically shows as "???.x K units" for the current minimum lot size of 100. 

When minimum lot size goes to 1, the format becomes "???.xxx K units". 

To accommodate all the numbers across the display, the font size has to be significantly reduced. Which makes a barely readable display even worse (for most baby boomers and others).

[ghchua]

In addition, once the board size is reduced. It does not go back to the previous bigger board size even if the share price subsequently drops and fails the threshold again. I suppose this reduces the confusion especially when we are dealing with bonus/share split situations.

Hi weijian,

What if let's say a $5 stock undergoes a 1 for 2 share consolidation? Isn't it pushing the stock to trade above $10? So we have to wait for the next review period for a change in the board lot size? Therein lies the confusion. Most stocks above $10 will trade at standard board lot size of 10 units while minorities at standard board lot size of 100 units, pending next review period.

The same for stocks below $10. Some stocks will fall below $10 and still trading at a standard board lot size of 10 units. So we have to wait for the next review period for a change in the board lot size? Most stocks below $10 will trade at standard board lot size of 100 units while minorities at standard board lot size of 10 units, pending next review period.

So after multiple period of reviews, we will never really have a situation whereby all stocks above $10 will trade at standard board lot size of 10 units and all stocks below $10 will trade at standard board lot size of 100 units.

[specuvestor]

I think lot size was created to minimise the secretariat paper work for shareholding register and high commission in the past with min comm

I think both are already not valid with digitisation and online broker

I think it's time to go to unit share ie no lot size as many developed exchanges and do away with special odd lot quotation and hopefully force mainboard stocks not to go penny price. If anything just retain lot size of 100 or 10 for Catalist or emerging board to avoid confusion as described by others above

My 2cents

[weijian]

In addition, once the board size is reduced. It does not go back to the previous bigger board size even if the share price subsequently drops and fails the threshold again. I suppose this reduces the confusion especially when we are dealing with bonus/share split situations.

Hi weijian,

What if let's say a $5 stock undergoes a 1 for 2 share consolidation? Isn't it pushing the stock to trade above $10? So we have to wait for the next review period for a change in the board lot size? Therein lies the confusion. Most stocks above $10 will trade at standard board lot size of 10 units while minorities at standard board lot size of 100 units, pending next review period.

The same for stocks below $10. Some stocks will fall below $10 and still trading at a standard board lot size of 10 units. So we have to wait for the next review period for a change in the board lot size? Most stocks below $10 will trade at standard board lot size of 100 units while minorities at standard board lot size of 10 units, pending next review period.

So after multiple period of reviews, we will never really have a situation whereby all stocks above $10 will trade at standard board lot size of 10 units and all stocks below $10 will trade at standard board lot size of 100 units.

hi ghchua,

Share consolidation generally only happens for companies whose share price have fallen below listing rules' min share price limits. While it is possible that share consolidation can still happen outside of this context, but it should be very less plausible.

Having some level of confusion for anything new, is nothing new. Not everyone will get it but I suppose rather than wait for perfection, wouldn't it be better to iterate an less-than-perfect-but-good-enough solution along the way?

As specuvestor has mentioned, going to "unit price for everything" is the no brainer. I speculate that may actually had been the MAS Review Group's preferred recommendation. But factors like minimum brokerage charges and the scarcity of broker custodian account adoption may have came into place. Looking at how things are going, I believe we are going to see vast differences in let's say a decade time.