S$8 billion wiped off OCBC value as shares slide 5.8% in heavy trade

[SINGAPORE] Shares of OCBC dropped as much as 5.8 per cent in intraday trading on Wednesday (Oct 7).

As at 11.11 am, the counter was down 5.2 per cent or S$1.66 at S$30.54. By the trading break, the counter had slipped further, down 5.8 per cent or S$1.85 to S$30.35 at 12.30 pm.

It was also the top traded stock by value, with over 14.8 million shares worth over S$459 million changing hands at that time.

OCBC’s value dropped from close to S$145 billion on Tuesday, to about S$136.4 billion as at 12.30 pm.

Citi downgraded the stock from “neutral” to “sell” in a banking note on Wednesday morning, with a target price of S$27.50. It expects OCBC’s Q3 earnings to be flat year on year, and growth optimism for the lender to be derailed.

This year OCBC has had the steepest jump in its valuation, with its price-to-earnings multiple expanding by 46 per cent. Citi noted that OCBC is trading at the tightest dividend yield spread over bond yield at 70 basis points.

Citi noted the market’s misplaced optimism on Singapore interest rates and OCBC’s exceptional first-half wealth related income. It expects third-quarter net interest margin to contract because of higher Singapore-dollar fixed deposit (FD) rates of 35 to 70 basis points.

Banking sector outlook

UOB Kay Hian remains cautious on banks as a sector as research director Jonathan Koh cited concerns about uncertainties from the escalation and prolonged conflict in the Middle East.

However, he added: “The trends of safe-haven liquidity inflows, higher bond yields and ongoing monetary tightening favour preference for banks.”

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Other local bank stocks also fell, but with smaller declines. DBS slipped 1.34 per cent and UOB was down 1.74 per cent in late morning trading.

Singapore’s banking trio’s heavy weightage in the ST Index brought the index down by 1.42 per cent close to noon.

Citi maintained its “buy” rating on DBS, and reiterated “sell” on UOB. It cited a preference for UOB over OCBC, “due to relative valuations/positioning”.

However, UOBKH said that its preferred “buy” remains OCBC despite the intraday fall.

“It benefits more from growth in wealth management. Its earnings growth is the strongest at 22 per cent year on year in H1 2026,” Koh said.

The three Singapore banks are part of an initial cohort of 11 stocks that have begun to trade in smaller lots after the Singapore Exchange on Monday debuted reduced board lot trading.