STI Hits 5,000. 3 Blue Chips I Will Still Buy

Market Overview - The Straits Times Index recently surpassed the 5,000 level before experiencing a downward reversal, raising concerns about whether it is too late for investors to buy stocks [1] - Historical trends indicate that new highs in indexes often lead to further gains, but elevated valuations necessitate careful stock selection [1] Company Analysis Singapore Telecommunications Limited (Singtel) - Singtel is recognized as Singapore's leading telecom company, known for its resilient earnings and cash flows from essential telecommunication services [3] - The company is diversifying its business through digital initiatives, with new segments like NCS and Nxera contributing positively to earnings and carrying higher margins [4] - For FY2025, Singtel reported S$4.6 billion in operating cash flow and has reduced its net debt, achieving a leverage ratio of 1.3 times as of 30 September 2025, down from 1.6 times a year prior [5] - Singtel's forward price-to-earnings (P/E) ratio is approximately 21.7, above its five-year historical average of 17.9, which may be justified by the stability of its core business and new growth areas [6] CapitaLand Integrated Commercial Trust (CICT) - CICT is noted for its reliable dividend payments since 2002, providing steady income that is particularly valuable in high valuation environments [7] - The trust currently offers a trailing dividend yield of 4.8%, slightly below its five-year average of 5%, with a diversified property mix and healthy occupancy rates supporting its sustainable distribution [8] ST Engineering (STE) - ST Engineering is positioned as a long-term growth compounder with strong drivers in commercial aerospace and defense sectors, supported by an order book of S$32.6 billion as of 30 September 2025 [9] - The company is expected to benefit from the post-pandemic recovery in aerospace and increased government spending on defense, indicating a solid growth trajectory [10] Investment Considerations - With the STI at 5,000, the focus should be on whether earnings can continue to grow to justify high share prices, alongside monitoring valuations and balance sheet strength [11] - Investors are advised to avoid stocks that have surged without earnings support and to be cautious of companies reliant on ideal economic conditions [12] - Strong companies can still provide capital appreciation and income generation even at record index highs, emphasizing the importance of quality over timing [13]