OVERVIEW:
SPDR funds are a family of exchange-traded funds (ETF) traded in US, Europe and Asia Pacific and managed by State Street Global Advisor. SPDRR Straits Time Index ETF ("STI ETF") is Singapore's first locally created ETF which can be traded like any listed share. It seeks to generate return that closely correspond to the performance of Straits Time Index ("STI").
Adopting physical replication model, STI ETF actually buy into constituents of STI so as to track its price movement of the country specific index.
ANALYSIS:
[1] First week of 2017 kicked off with numerous positive economy data. Latest Purchase Manager Index (PMI) showed that US, Europe and China are comfortably under expansion mode. For Singapore, last quarter GDP saw 1.8% growth year on year which beats market consensus. Steady economic performance gave a push to regional indices. As a index which tracks global market sentiment, STI has gained some ground of support, so limited downside risk meantime.
[2] OPEC has been aggressively pushing for oil production cut (beginning on 2017) among its member as well as non-OPEC member countries. The biggest worry of 2016 has been removed. Market could have fully priced in the downside risk for offshore marine and related sectors.
[3] US Federal Reserve just raised interest rate. The next increment would depend on actual policy implementation from new president and subsequent economy data. Market has just bottom out from most of gloomy factors.
[4] STI is actually trading in low valuation among the regional indices. It is also below mean value in its three years historical movement.
PRICE vs YIELD CHART:
STI has been moving into a narrowing corner of ascending triangle. Last trading day saw it hitting 2967 fourth times since beginning of 2016. A quadruple top break up looks possible on 2017. Trader could position for potential upswing by buying the ETF.
Shall price continue to range bound underneath 2967, it is worth to accumulate as it translates to dividend yield > 3%, which is giving first payout on coming two months. Buying into ETF protects investors from over exposure to specific business sector risk (eg. oil, Uber, airlines competition, 4th telco, etc).
Above shows STI movement. STI ETF which tracks the index is below. Last year dividend payout was 0.93 per shares.
*** Note: Same counter has been mentioned in Jan[5] 2016 ***
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