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Singapore Banks August rising
Strong August loans spell 3Q19 upside potential According to MAS, August’s system loan growth was 5.1% YoY – its strongest in eight months. As in July, the momentum was driven by ACU business lending. Climbing ACU loans to manufacturing, building & construction and holding companies point to an ongoing relocation of production capacity from China to ASEAN. Stronger-than-anticipated loan growth has the potential to produce 3Q19 upside surprises, especially for UOB and OCBC, given their strong ASEAN franchises.
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Singapore Monthly Strategy Back to the negotiation table
• STI’s next move hinges on trade talks – 3110 pivotal, STI should rise to 3215 if positive or fall to 3030 if negative • Buy early cyclicals if trade negotiation ends positively – UOB, City Developments, UOL, CapitaLand & Venture Corp • Go defensive & yield-seeking if trade negotiation collapses – Thai Beverage, Koufu, Sheng Siong, ST Eng, CDL HT, MINT, MLT • Staying positive on hospitality sector – CDL HT, Jumbo, Genting
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Singapore Banks Resilient loan growth
• Industry loans continued to grow 1% m-o-m/ 5.1% yo-y on strong business loan growth • Domestic mortgages declined for seventh consecutive month • Loan-to-deposit ratio continued to moderate on growing deposit base • Remain watchful on asset quality; UOB remains our top pick
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Check out our compilation of Target Prices
