Business

Banks continue to lead STI gains

DBS drops but OCBC, UOB rise on hopes of US Fed hiking interest rate again this year

At the risk of sounding like a broken record, this week's main play as far as blue chips were concerned was the banks, their prices driven by the logic that higher interest rates mean wider net interest margins and therefore earnings.

So it was that their biggest jump came on Thursday following the release of the minutes of the September United States Federal Open Market Committee meeting, at which several Fed members said they thought the economy is strong enough to withstand a third rate hike this year, widely expected in December.

In the federal funds futures market, the probability of this occurring has jumped from 70 per cent to 77 per cent.

Yesterday though, a reversal in one of the banks saw the Straits Times Index (STI) finish a net 16.02 points, or 0.49 per cent, higher at 3,319.11, bringing its gains for the week to 27.82 points, or 0.85 per cent.

Turnover has hovered around $1 billion daily for more months than brokers would care to remember. Yesterday, volume figures were more than two billion units worth $1.3 billion. Excluding warrants, the advance-decline score was 271 to 183.

Among the banking stocks, DBS, among the top laggers, lost nearly two points. It ended the session at $21.42, losing $0.10 on a volume of 2.3 million.

In contrast, shares of OCBC and UOB gained a combined 1.8 points. OCBC's counter closed at $11.48, up three cents, while UOB shares finished at $24.29, five cents higher.

"Breaking out above this critical point will pave the way for more upside towards the previous highs of 3,354 points."CMC Markets on the Straits Times Index

A Private Banker International (PBI) report on the "2017 PBI Top 20 Asia-Pacific Assets Under Management (AUM) Rankings" said DBS' private bank's AUM for high-net-worth clients rose 2.8 per cent year-on-year to US$81.2 billion (S$109 billion) last year.

"However, this was not enough to stop it falling to 6th place in this year's rankings - down from 5th in last year's survey," it said.

It noted that OCBC Bank (Bank of Singapore)'s AUM for high-net-worth clients jumped from US$55 billion in 2015 to US$79 billion last year, a year-on-year rise of 43.6 per cent.

"This enabled OCBC Bank (Bank of Singapore) to climb the rankings from 11th place in 2015 to 7th place last year," the reported added.

UOB's private bank, ranked 15th, recorded an AUM for high-net-worth clients of US$25 billion last year, up 25 per cent year-on-year.

Property stocks have also enjoyed a bit of support. A flurry of collective sale deals, some proposed and some completed, have added to the perception that the sector is recovering.

City Developments (CDL), meanwhile, has benefited from its offer to buy out the remainder of shares in its London-listed hotel subsidiary Millennium & Copthorne, a deal analysts have unanimously said is beneficial to CDL.

Over the course of the week, the stock gained $1.06, or about 9 per cent, at $12.66.

In the second line, shares of Raffles Education Corp yesterday rose four cents to $0.36 on volume of 30.3 million.

CMC Markets yesterday spoke of 3,300 as a psychological and technical resistance level for the STI.

"Breaking out above this critical point will pave the way for more upside towards the previous highs of 3,354 points," it said.

"The STI has under-performed regional peers over the last two months, and its performance was lagging behind major indices S&P and Hang Seng. Good earnings results will help to boost confidence and attract more liquidity into Singapore."

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts