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UOB KAYHIAN |
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Singapore Economics Dodging Recession
Escaping a Technical Recession in 3Q Singapore may have narrowly dodged a technical recession in the third quarter, judging from July data and anecdotal evidence for August. Manufacturing may remain in recession, but services growth likely improved in 3Q. Three reasons for the change in view: [1] frontloading of trade orders, in anticipation of higher US import tariffs; [2] strong ACU (offshore) lending to fund supply chain shifts to ASEAN; and [3] stronger hospitality growth due to Hong Kong protests.
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Oversea-Chinese Banking Corporation (OCBC SP) Unlikely To Be Distracted By Acquisition Down South
We see higher probability of OCBC emphasising on its north-bound expansion to increase its 20% stake in BON (market cap: S$25.6b), as and when allowed to do so by the authorities in China. It will also deploy capital to support expansion to double PBT from GBA to S$1b by 2023. Bank Permata is smaller than OCBC NISP and has a low ROE of 5.9%. It may not be worth the effort to acquire Bank Permata due to its chequered history. Maintain BUY. Target price: S$14.48.
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Check out our compilation of Target Prices