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Singapore bank selloff pressures Straits Times as earnings fears grow
The Straits Times Index is down 6.6% from a peak seen more than five weeks ago, with DBS, OCBC, and UOB accounting for more than half of the benchmark’s decline.
A selloff in Singapore bank shares tied to fears of earnings downgrades is pressuring one of Asia’s best-performing benchmarks and testing the city-state’s safe haven reputation, according to LiveMint Markets citing Bloomberg.
The Straits Times Index has fallen 6.6% from a peak more than five weeks ago, dragged by DBS Group Holdings, Oversea-Chinese Banking Corp., and United Overseas Bank. The three lenders make up more than half of the index, and they collectively shed $22.4 billion in market value last week alone.
The decline reflects concern that local banks are moving into a tougher phase. Elevated bond yields are reducing the attractiveness of dividend payouts, while banks also face the need to account for losses on their bond holdings, prompting Wall Street brokers to warn of downside risks to earnings next month.
Alex Ho, a sales trader at CMC Markets Singapore, said November results will be the first real test for whether the selloff spreads beyond banks or weakening earnings and capital returns emerge.