S’pore banks hit record highs, DBS tops $70 for the first time

Analysts expect strong wealth management momentum and attractive dividend yields to continue underpinning bank share prices.

SINGAPORE – Shares of Singapore’s three banks climbed to record highs this week, buoyed by expectations that interest rates will stay higher for longer and growing investor optimism ahead of the banks’ second-quarter earnings reports in early August.

DBS Bank punched through the $70 mark for the first time on July 9 and ended the week up 5.7 per cent at $70.45. OCBC Bank broke through $27 and closed 8.46 per cent higher at $27.43, while UOB surpassed $44 and finished the week up 10.12 per cent at $44.38.

Analysts said they expect strong wealth management momentum and attractive dividend yields to continue underpinning bank share prices.

Investor interest could also receive a further boost after the Singapore Exchange said on July 1 that it would cut the standard board-lot size from 100 units to 10 units for stocks priced between $10 and $100, including the three local banks.

Meanwhile, shares of Singapore Airlines briefly retreated after renewed US-Iran tensions triggered swings in oil prices, but still finished the week up 1.31 per cent at $7.71.

But the pullback in the national carrier as well as other oil-sensitive counters did little to dent improving sentiment in the broader market, with the Straits Times Index (STI) ending the week 4.29 per cent higher at 5,469.29.

“This selective reaction stands in contrast to episodes in the previous months when geopolitical tensions weighed more broadly on the STI and regional peers,” said James Ooi, market strategist at Tiger Brokers.

“Investors have likely grown fatigued and desensitised to the repeated cycles of escalation and de-escalation, and are now focusing more on local developments and underlying company fundamentals rather than recurring geopolitical headlines,” he added.

Gold prices recently rebounded from lows near US$4,000 an ounce compared with their January peak above US$5,000, after a weaker-than-expected US jobs report for the month of June eased expectations of further Federal Reserve rate hikes.

Lower interest rate expectations tend to support gold because the precious metal does not pay interest, making it relatively more attractive when yields on competing assets are expected to remain lower.

Still, gold lost some ground through the week as inflation fears grew after US President Donald Trump said that the ceasefire between the US and Iran was over.