Why Investors Are Angry With Singapore Blue Chips

Alvin Chow
Alvin Chow

Blue chips are perceived as safer investments compared to other stocks.

Most investors feel more assured buying into these well-known companies and are less likely to expect bad things to happen.

Unfortunately, Singapore’s blue chips have been performing badly. Even holding long term couldn’t alleviate their poor performance.

This left many investors in Singapore blue chips frustrated, and even angry.

They were made to believe that blue chips were safe and it would be fine as long as they held these stocks long term.

Imagine losing -38% in Singtel, -59% in Keppel Corp and -61% in SIA, after holding them for the past 12 years!

These results are hard for anyone to swallow. It’s no wonder that investors are left feeling penalised. We cannot blame them for losing faith in the stock market (or just the Singapore stock market).

The Straits Times Index (STI) is essentially a basket of blue chip stocks in Singapore. The Index was revamped with the help of UK indexing company, FTSE, on 10 Jan 2008. This was in the midst of the Great Financial Crisis where the stock markets were crashing.

It doesn’t take a genius to see the STI has been trading in a horizontal range for the last 12 years.

But most investors probably didn’t buy the index. They probably picked and chose some blue chips instead. I would think that this might even be a worse option as many of the individual blue chips did really badly in the past 12 years.

I tracked the returns of the revamped STI components dated 10 Jan 2008 – prices are adjusted for corporate actions such as dividends.

STI Components on 10 Jan 2008Adjusted Opening Price on 10 Jan 2008STI Components Currently or Date Of ReplacementClosing Price on 26 Aug 2020% ChangeRemarks
Fraser and Neave1.4933 Apr 20132.605174%Replaced by HPH Trust on 3 Apr 2013
Jardine Strategic15.9Jardine Strategic20.831%
ST Engineering3.2102ST Engineering3.59%
Jardine C&C19.5498Jardine C&C19.480%
CapitaMall Trust2.1383CapitaMall Trust1.9-11%
Hongkong Land4.89Hongkong Land3.93-20%
SIA Engineering4.272118 Sep 20173.37-21%Replaced by Jardine Strategic on 18 Sep 2017
Olam2.936421 Sep 20151.995-32%Replaced by SATS on 21 Sep 2015.
Starhub2.8824 Sep 20181.71-41%Replaced by Dairy Farm on 24 Sep 2018
Keppel Corp11.1251Keppel Corp4.61-59%
Noble Group8.564721 Mar 20163.4012-60%Replaced by CapitaComm on 21 Mar 2016. Suspended
Yanlord2.723 Mar 20091.02-62%Replaced by ComfortDelGro on 23 Mar 2009
SPH3.704522 Jun 20201.35-64%Replaced by Mapletree Ind Tr on 22 Jun 2020
Sembcorp Industries5.3507Sembcorp Ind1.87-65%
Sembcorp Marine2.488519 Sep 20160.8164-67%Replaced by Jardine Matheson on 19 Sep 2016
Cosco Corporation5.6622 Mar 20101.24-78%Replaced by CapitaMall Asia on 22 March 2010.
Keppel LandDelisted23 Mar 2009DelistedDelistedReplaced by SMRT on 23 Mar 2009. Delisted on 15 Jul 2015.
NOLDelisted24 Sep 2012DelistedDelistedReplaced by IHH on 24 Sep 2012.

20 out of 30 stocks had losses with an average of -42% over the 12 year period (or until some of the stocks were kicked out of the index)! It is likely to perform worse than an underperforming index.

8 stocks had gains with an average 40% returns over the past 12 years. The best performer was ThaiBev with 142%.

2 were delisted and I couldn’t even get their historical price data.

And not to forget Noble, which is currently suspended after inflating the investment value of its associated companies in Australia. Yes, a blue chip can turn out to be a fraud. Fraudulent companies are not limited to China.

Olam was also attacked by a short seller(Muddy Waters) until Temasek Holdings saved them from the ugly episode. However, Temasek couldn’t save it from being kicked out of the index as its performance waned.

The beauty of index investing is that the fund manager will replace the stocks that get kicked out of the index. But an investor is unlikely going to sell a stock just because it is no longer in the index. In the case of Olam, an investor would have lost 32% if he sold it in 2015 (the year Olam was kicked out). But if he would to hold Olam until today, he would have lost 55%.

11 of the STI components on 10 Jan 2008 were replaced. I believe many investors are still holding on to them till today. Here are their performances, most were worse off.

Date the stock was booted out of STIReturns if sold Returns if held till today
F&N3 Apr 2013+74%-14%
Olam21 Sep 2015-32%-55%
Yanlord23 Mar 2009-62%-55%
SIA Engineering18 Sep 2017-21%-56%
Starhub24 Sep 2018-41%-58%
SPH22 Jun 2020-64%-71%
Sembcorp Marine19 Sep 2016-67%-91%
Cosco Corp22 Mar 2010-78%-97%
Noble Group21 Mar 2016-60%-99% (suspended)

Very ugly numbers right?

But what is done is done.

If you happen to have suffered some of these losses, you have to learn and move on.

Why SG’s stock market has been underperforming

It has not been able to transform into the “new economy“.

The “new economy” consists largely of the technological companies while the old economy is mainly made up of finance and real estate companies.

Here’s a diagram I drew last month. I wanted to show the correlation between the index tech exposure and its returns – the higher the tech exposure, the higher the returns.

It is not surprising that STI has no tech exposure. Half of our index weight consists of the 3 banks (DBS, OCBC and UOB) and REITs make up a another big chuck of our index weightage.

This explains the poor performance, in my opinion.

That said, please don’t jump to the wrong conclusion. This trend doesn’t suggest that the solution is to just buy tech companies and hold them forever.

Rather, the main lesson is that:

The Markets are Always Changing

What’s trendy today may not be so in the future.

Case in point, Keppel Corp, Sembcorp Ind and Sembcorp were the drivers of stock market returns during the 2007 bull run. They made so much money that it is common to hear stories of employees receiving 6 months bonuses. Those were the good days.

These stocks were the hot favourites back then, and that was how many investors got sucked into them at the peak, and were left holding them till today. Even giants like ExxonMobil were not spared when the economy restructured.

SPH was a monopoly of the print media in Singapore. What could go wrong until it went wrong – Google and Facebook took away the lunch.

Singtel and Starhub were also darlings among investors, raking in recurring subscription fees with high retention rates. Until the government decided they have made too much and introduced competition which eroded the margins and dampened their share prices.

So I repeat again – the market changes. Indices change to reflect the changes in the economy and the markets. Not just the STI, even the S&P 500 has also gone through so much changes over the decades – companies come and go.

It is so hard to buy a stock that would grow over the decades because things change. Your investment views need to be updated and your portfolio need to change with times too.

Now tech stocks are all the rage because the market favours the narrative now.

Don’t just buy because their performances have been good, only to make the same mistakes with the oil and gas stocks in the past – buy high and see the prices drop when the narrative changes.

You need to have a well thought through investment thesis that is updated with times.

Change is the only constant.

Cliche? Doesn’t make it any less true.

Charles Darwin said, “it is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.

As an investor, it’s also important to discern what is a temporary impact (which you should hold on to) versus a permanent change (which you should bail). It is hard to tell between the two at times.

Sounds like hard work?

Well as Charlie Munger said, “it’s not supposed to be easy. Anyone who finds it easy is stupid.

Alvin Chow
Alvin Chow
CEO of Dr Wealth. Built a business to empower DIY investors to make better investments. A believer of the Factor-based Investing approach and runs a Multi-Factor Portfolio that taps on the Value, Size, and Profitability Factors. Conducts the flagship Intelligent Investor Immersive program under Dr Wealth. An author of Secrets of Singapore Trading Gurus and Singapore Permanent Portfolio. Featured on various media such as MoneyFM 89.3, Kiss92, Straits Times and Lianhe Zaobao. Given talks at events organised by SGX, DBS, CPF and many others.
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6 thoughts on “Why Investors Are Angry With Singapore Blue Chips”

  1. FYI Alvin, 2007 good times is up to 10-12 months bonus not 6, which is considered lowest mainly for admin staffs.

    Yes, market is changing.. totally agree. But for developed country like SG that had access to global resources, and not anticipated this, nor up to today have any feasible solution going forward, it is not acceptable, and indirectly are creating our own downfall.

    STI just like SG are being too comfortable to be only winners within SG, when we have all the control we want on the local population.

    Is Temasek good for Sg or Sporean for the future? Are the Senior management of Temasek LT in investment for their own bonuses but ST view on country’s growth?

    When it comes to global exposure and international competitiveness and creativity, we are like a child still learning how to swim.

    Sadly, I am a local bred S’porean who really love the country, but we are on the wrong track, and our next generation is going to suffer!

    Not sure you ever been to China or do business with Chinese before. Their progress make us look like frog in the well and yet most Sporeans are still living in the past thinking that it’s the 90s when we are still enjoying the superiority as a country within Asia.

    Like UK, SG are rigid and not innovative! And many SMEs are faltering.

    On the contrary China, is like US and they are still hungry and constantly innovating and chasing for growth.

    • I agree that we are behind. But I think that as a small nation, our strategy might be different. It is just too difficult to rival superpowers like US and China.

      Below was what I wrote previously:

      Over a coffee conversation with Thomas from, he mentioned that the true form of Singapore Inc is that of a ‘payment gateway’. We need to have MNCs set up shop on our shores so that we can tax them. The above statistics showed that his words ring true.

      In order to attract foreign MNCs, we have to be a hub for everything. The Smart Nation initiative aims to attract the biggest tech companies to set up offices and regional headquarters here. They are future drivers of the global economy. They might also turn out to be the biggest contributors of our tax dollars.

      The Government, with its monopoly on talent, has figured things out ahead of us. We are not in a favourable position to create a world beating MNC. The odds of that happening are very low. The next best thing we can do is to attract foreign MNCs so that we can tax them. We have to be prudent with our expenses and invest our large foreign reserves to bolster our financial future. We need to operate as one Singapore Inc.

      In the movie Justice League, there was a scene whereby Flash asked Batman, given that the latter is only human, what was his superpower really was. Batman replied, “I’m rich.”

      Singapore’s superpower is closely linked to our financial and economic status. We have no resources; we only have money. We cannot lose this power. The only way to preserve this and to ensure our survival is for our government to plan, execute and function as one Singapore Inc.

      Hence, Singapore just needs to attract Google, Facebook, Amazon, Apple and the likes to set up shop here. But we need to provide the infrastructure (Smart Nation), talent pool (re-skill workforce if we need to) and political stability, else they won’t come. With their presence, our Small Medium Enterprises (SMEs) can become vendors to these MNCs, earning good profits for our towkays and provide employment to Singaporeans.

        • Thanks Rolf, I of course would love to see more Singapore success case studies.

          I think we are caught in a vicious cycle. We don’t really have an entrepreneurial culture. We still have that ‘study hard, get a job’ mindset. Ask most parents, they wouldn’t really encourage their children to pursue entrepreneurship. One may even get stares from relatives during CNY, subtly suggesting ‘get a real job’ in their conversations.

          But of course we can also put some blame on the government being too paternalistic – the government decides on so many things in the country that the citizens stopped to think. Also, they control the GLCs such that people rather work for them than to start their own businesses. Overtime, the people have no drive to be enterprising and GLCs become uncompetitive in the world’s stage.

          As I said, I agree with you to see a better Singapore. Especially a more enterprising one. What would your solution be? How to create a generation of entrepreneurs? Would you encourage your friends and family members to do it? Would you consider doing it yourself?

  2. Hi Alvin,

    I believe like me, you are local bred home grown Singaporean. We served our national duty, and you are likely my junior in NTU.

    Undoubtedly, I love to see my country and my fellow countrymen prosper! I am a patriot but guess I have the right to speak my heart for my country and my countrymen.

    The problem is not in Singaporeans! We are one of the most hardworking in the world and intelligent and organized and logical. Most Singaporeans have very good ethics, sometimes too good that we were taken advantage by foreigners in our own country.

    SG is the only country in the world I have been to aside from Africa and perhaps India that local are second class citizens in our own country.

    SG don’t lack entrepreneurs! I traveled globally and have work with the top people/entrepreneurs in Europe or US and in SG. We are not inferior but our environment is not suitable for entrepreneurs. Have a very good /successful entrepreneur in US or China living as a Singaporean, they likely will fail.
    Read below : We don’t lack entrepreneurs!

    You asked if I will consider being an entrepreneur myself or encourage my children! My answer as follows in an article I wrote.

    The answer is yes, for me and my children. but risk need to be assessed and with a strong support is better, because as I said, SG created an adverse environment for local entrepreneurs but favors big organization. We tend to “sa ka” others and “step down” own kind, bcos of the seduction model we used.


    Guess no one has solution. We have gone too far now. The solution should start in 90s.

    But now, the first step is for us to realize the truth. If you cannot even accept that this is the truth and change your mindset, even I give you a solution you will not accept, bcos of the brainwashing we were in since young.

    Most of Singaporeans who worked overseas and travelled widely overseas at work or have overseas many friends know the problem!

    I am not blaming the government for having no solution! Because they are unable to devise any, if in the first place they fail to acknowledge!

    It is a fact that many top MNCs favor foreign PMETs in an unfair manner. If there isn’t, why are we comparing and complaining?

    While I myself are not affected, but I seen /heard those situations and pitied those who were affected!

    Yet our rulers do not want to acknowledge!

    You tell me… even if I have a solution, do you think our leaders will accept. They are not at the ground, fail to listen and fail to see the truth, bcos their own life is good and the bureaucracy of “I am higher and always right” is absolutely terrible in SG, and will pull us down gradually but surely!

    And those Singaporeans not affected being in government sector by foreign PMETS or being clouded by false vision created, will not complain bcos it does not affect them. It does not affect me, but i know and see and feel sorry for those people. I did my best in my own company by employing local.

    So what is good of a solution when acknowledgement of problems, changing of mindset as a basic step has not even begin!


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