Banks drive Singapore stocks to three-month low as brokerages flag earnings risks
EWS•Singapore stocks fell more than 3% to a nearly three-month low as rising bond yields raised concerns about banks’ earnings and funding costs. DBS, OCBC and UOB dropped more than 4%.
1. Singapore stocks slide
The FTSE Straits Times Index fell as much as 3.2% on Thursday, reaching its lowest level since mid-July. JPMorgan cited higher long-dated bond yields, funding costs and the normalization of exceptional first-half wealth-related income as risks to Singapore banks’ earnings, and recommended trimming exposure to DBS and OCBC; Citi downgraded OCBC to sell.
2. Bank shares fall
DBS fell 5.2%, its largest single-day decline since April last year. OCBC dropped 4.8% and UOB fell 5.3%; the three banks account for more than a quarter of Singapore’s main index. UOB Kay Hian Research’s John Cheong said the market’s narrow rally concentrated in financials appeared to be reversing, while noting it was too early to say whether the decline was short-term.
3. Regional market moves
South Korea’s KOSPI fell as much as 2.3%, and Taiwan stocks slipped 0.9%. Samsung Electronics projected quarterly profit would top 100 trillion won ($74.76 billion), estimating a nearly nine-fold increase in third-quarter earnings, but its shares fell more than 2%.
