Rally in shares of Singapore banks overdone

Hong Kong

SINGAPORE'S banks have come too far, too fast.

DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank have joined a global sector upturn. By historical standards, the three still look cheap. But the lenders are badly exposed as bad debt risks rise across the region.

Donald Trump's election victory has boosted expectations of quicker inflation in the United States, just as the Federal Reserve appears poised to tighten policy. That has buoyed the US dollar and driven up bond yields worldwide, especially on longer-dated debt. Those conditions help improve interest margins for banks, which can raise short- term funds cheaply and make longer-dated loans a…