Investors are in a celebratory mood as the Straits Times Index (SGX: ^STI) hit a new record recently. The bellwether blue-chip index surpassed 4,000 for the first time last month and has since broken past the 4,200 mark.
Along the way, DBS Group (SGX: D05) also hit a new milestone by briefly touching S$50 per share. This feel-good sentiment has pushed the share prices of many blue-chip companies to their 52-week highs.
Can this rally be sustained and will the STI break new records from here?
Earnings and dividend momentum
The STI is made up of the 30 largest companies on the Singapore Exchange (SGX: S68). The three local banks make up more than half the index, with the other 27 companies making up the rest.
When companies report higher earnings and increase dividends, their share prices tend to follow. And right now, that is exactly what we are seeing.
Better earnings, stronger dividends
…
