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Singapore shares close higher, led by banks

Tuesday, February 23, 2016 - 17:36

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THE Straits Times Index on Tuesday moved in tandem with rises and falls in various other markets, most notably the Dow futures, Hong Kong and China. It eventually settled at 2,672.07, a net gain of 11.42 points for the day. At 5pm, the Dow futures stood 40 points weaker.

Turnover was a decent 1.4 billion units worth S$1.3 billion and excluding warrants there were 212 rises versus 165 falls.

All three banks rose and were the largest contributors towards the index's gain.

CIMB in its Feb 22 bank report said 4Q15 centred on asset quality issues, with concerns on the banks' exposures to oil & gas, commodities, and China.

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Market voices on:

"We are most worried about the upstream oil & gas sector, of which DBS has the biggest exposure at S$12 billion (4 per cent of loans), followed by OCBC at S$5.8 billion (3 per cent), and UOB at S$3.8 billion (2 per cent)," said CIMB.

"OCBC is the most conservative, having recognised S$822 million of oil & gas loans as NPLs in 2015. UOB is concerned with 20 per cent of its oil & gas exposure (S$2 billion), but has yet to recognise them as NPLs. We discount DBS's view that it will not see asset quality worsen in this portfolio in 2016, and expect credit losses if oil prices remain low."

CIMB maintained an "overweight" on banks as it thinks present prices are discounting an even more bearish view. In order of preference, it recommended OCBC, DBS and UOB.

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