Banks' surge lifts market cap in November

Much of the overall gain in total market cap could be attributed to the stellar performance by the three banking stocks, which topped the list of gainers for the month. The rise in the Sibor also bodes well for banks' interest income, said IG market
Much of the overall gain in total market cap could be attributed to the stellar performance by the three banking stocks, which topped the list of gainers for the month. The rise in the Sibor also bodes well for banks' interest income, said IG market strategist Pan Jingyi.ST FILE PHOTO:

A surge of interest in banking stocks and a few initial public offerings helped drive market value further past the trillion-dollar mark over the past month.

The total market capitalisation of the 748 companies listed on the Singapore Exchange hit $1.014 trillion at the end of October and went up 0.2 per cent to $1.016 trillion at the end of November. This is despite 393 firms that saw their market caps fall compared with the 207 that recorded increases.

Much of the overall gain in total market cap could be attributed to the stellar performance by the three banking stocks, which topped the list of gainers for the month.

OCBC Bank's market cap rose 4.6 per cent last month to $52.5 billion, while United Overseas Bank gained 6.4 per cent to $43.79 billion.

DBS Group's market cap surged 7.2 per cent to $62.64 billion, overtaking SingTel as the highest-valued primary-listed stock in Singapore.

"Local bank shares were seen broadly lifted in November with better-than-expected economic conditions, as seen via the latest third-quarter GDP report, helping to fuel investors' interest," noted IG market strategist Pan Jingyi.

The rise in the Singapore Interbank Offered Rate (Sibor), a key interest rate, also bodes well for banks' interest income, she noted.

CMC Markets Singapore analyst Margaret Yang added that in early November, DBS set aside $815 million in allowances to cover the oil and gas support service exposure in its third-quarter earnings report.

However, "besides the allowances, the group's core businesses registered quarterly net profits of $822 million in the quarter.

"This measurement removed uncertainties about asset quality outlook and allowed investors to shift the focus to group's operating performance and digital agenda."

Five debutantes added to trading excitement in November - seafood restaurant chain No Signboard, Cromwell Real Estate Investment Trust, pre-school operator MindChamps, restaurant group RE&S Holdings and Keppel-KBS US Reit.

Ms Yang added that the local stock market may consolidate at around 3,400 towards the end of the year with upside capped by external factors such as geopolitical uncertainties, a Fed rate hike and profit-taking while the downside is cushioned by relatively low valuations and an improved economic outlook.

A version of this article appeared in the print edition of The Straits Times on December 01, 2017, with the headline 'Banks' surge lifts market cap in November'. Print Edition | Subscribe