WHAT IS MARKET CAPITALISATION?
Market capitalisation is a calculation of the market value of a company's shares. You can simply calculate it by taking the stock price and multiply it by the company's outstanding shares. StockFacts on the SGX website has this data readily available. Here's what we see for the 2 banks:
OCBC trading at $8.36, Market Cap = SGD 34,980.31 Million
UOB trading at $17.92, Market Cap = SGD 28,362.62 Million
So, although UOB is trading at more than double of OCBC, it's market capitalisation is smaller than OCBC.
Let's take a look at the market capitalisation of stocks in the STI Index, ranked by size:
| STI Constituents | Market Capitalisation SGD | |
| 1 | SingTel | 60426.16 |
| 2 | DBS | 39080.54 |
| 3 | OCBC Bank | 34980.31 |
| 4 | UOB | 28362.82 |
| 5 | ThaiBev | 23101.22 |
| 6 | Wilmar Intl | 20792.76 |
| 7 | HongkongLand USD | 19261.88 |
| 8 | Jardine C&C | 12766.13 |
| 9 | Capitaland | 12669.80 |
| 10 | SIA | 12517.86 |
| 11 | ST Engineering | 9783.79 |
| 12 | Keppel Corp | 9731.10 |
| 13 | Genting Sing | 8648.91 |
| 14 | Global Logistic | 8486.18 |
| 15 | CityDev | 8047.32 |
| 16 | SGX | 7949.05 |
| 17 | Capitamall Trust | 7261.73 |
| 18 | Ascendas Reit | 6311.69 |
| 19 | StarHub | 6178.02 |
| 20 | SPH | 6055.51 |
| 21 | ComfortDelGro | 5794.61 |
| 22 | HPH Trust USD | 5354.56 |
| 23 | Sembcorp Ind | 4951.05 |
| 24 | SATS | 4626.36 |
| 25 | Golden Agri-Res | 4393.49 |
| 26 | UOL | 4323.47 |
| 27 | Capitacomm Trust | 4153.65 |
| 28 | SIA Engineering | 4122.56 |
| 29 | YZJ Shipbuilding SGD | 3410.34 |
| 30 | Sembcorp Marine | 3239.10 |
LARGE CAP / MID CAP / SMALL CAP, WHAT ARE THEY?
For easy reference, we follow FTSE indices to get an idea of what are the large caps, mid caps and small caps. Caps refer to market capitalisation.
FTSE STI Index: also referred to as BlueChips or Large Caps, these are the top 30 companies in the SGX Mainboard, and generally have market cap more than $1 billion. Eg. Singtel. The companies are listed in the table above.
FTSE ST Mid Cap Index: The next 50 in the SGX Mainboard, after ST Index. Eg. M1
FTSE ST Small Cap Index: Companies within top 98% of SGX Mainboard, but not large enough to be in STI or Mid Cap
ADVANTAGES & DIFFERENCES BETWEEN THE MARKET CAPS
While each category have different characteristics and their own advantages, large caps tend to be more stable and give a stable dividend payout. They are usually covered by analysts and information about the company is readily available. Most likely, you will see their brands prominently, eg. SingTel, UOB, ComfortDelGro. Being widely known, large caps are usually less likely to be deeply discounted stocks.
On the other hand, small caps with a good background and growth story (caution: homework on the stock needs to be done), will usually have better potential in stock price appreciation. These stocks tend to be more risky than larger caps. If selected correctly, the smaller cap stocks can outperform and give better returns than large caps.
It is good to allocate your portfolio with different categories of market cap, to diversify the different risk and reward characteristics. If you are one who is more risk averse, then you can tweak the allocation towards more large caps.
DIVIDEND YIELDS & STABILITY OF PAYOUT OF LARGE CAPS
As mentioned earlier, large caps tend to give a stable dividend payout and have more price stability. Here's the dividend data for large caps based on recent stock prices. As you can see, most of them are stable in their dividend payout, despite the different business models:
| As of 17 Jun 2016: |
No. of payouts a year
|
Are the dividend amounts predictable?
| |||
| STI Constituents | Market Capitalisation SGD | Dividend Yield %pa | |||
| 1 | SingTel | 60426.16 | 4.62% pa | 2 times | Yes |
| 2 | DBS | 39080.54 | 3.85% pa | 2 times | Yes |
| 3 | OCBC Bank | 34980.31 | 4.31% pa | 2 times | Yes |
| 4 | UOB | 28362.82 | 3.91% pa | 2 times | Yes |
| 5 | ThaiBev | 23101.22 | 2.54% pa | 2 times | Yes |
| 6 | Wilmar Intl | 20792.76 | 2.31% pa | 2 times | Yes |
| 7 | HongkongLand USD | 19261.88 | 3.29% pa | 2 times | Yes |
| 8 | Jardine C&C | 12766.13 | 2.87% pa | 2 times | Yes |
| 9 | Capitaland | 12669.80 | 3.01% pa | 1 time | Yes |
| 10 | SIA | 12517.86 | 4.26% pa | 2 times | Not really |
| 11 | ST Engineering | 9783.79 | 3.17% pa | 2 times | Yes |
| 12 | Keppel Corp | 9731.10 | 6.34% pa | 2 times | Not really |
| 13 | Genting Sing | 8648.91 | 2.08% pa | 1 time | Yes |
| 14 | Global Logistic | 8486.18 | 3.33% pa | 1 time | Not really |
| 15 | CityDev | 8047.32 | 0.90% pa | 2 times | Yes |
| 16 | SGX | 7949.05 | 4.17% pa | 4 times | Yes |
| 17 | Capitamall Trust | 7261.73 | 5.51% pa | 4 times | Yes |
| 18 | Ascendas Reit | 6311.69 | 6.51% pa | 3-4 times | Not really |
| 19 | StarHub | 6178.02 | 5.6% pa | 4 times | Yes |
| 20 | SPH | 6055.51 | 4% pa | 2 times | Yes |
| 21 | ComfortDelGro | 5794.61 | 3.35% pa | 2 times | Not really |
| 22 | HPH Trust USD | 5354.56 | 9.7% pa | 2 times | Yes |
| 23 | Sembcorp Ind | 4951.05 | 3.97%pa | 2 times | Yes |
| 24 | SATS | 4626.36 | 3.6% pa | 2 times | Yes |
| 25 | Golden Agri-Res | 4393.49 | 1.38% pa | 1-2 times | No |
| 26 | UOL | 4323.47 | 2.76% pa | 1 time | Yes |
| 27 | Capitacomm Trust | 4153.65 | 6.14% pa | 2 times | Yes |
| 28 | SIA Engineering | 4122.56 | 3.81% pa | 2 times | Yes |
| 29 | YZJ Shipbuilding SGD | 3410.34 | 4.83% pa | 1 time | Yes |
| 30 | Sembcorp Marine | 3239.10 | 3.87%pa | 2 times | Not really |
Hence, it pays to include some large caps/bluechips in your portfolio.
Next week, we will touch on the dividend payouts for stocks in the FTSE Mid Cap Index.
