SGX issues 'trade with caution' advice for UOB

Singapore

UNITED Overseas Bank (UOB) shares surged almost 4 per cent yesterday in active trading, prompting a rare query from the Singapore Exchange.

UOB, which has outperformed its peers for several months now as well as the key benchmark index due to its lower China exposure, said it was not aware of any reason for the unusual trading. This resulted in SGX issuing a "trade with caution" advice for the stock.

The exchange query was a first for UOB in recent memory. A check showed that it was the first time SGX had queried the bank since 2009, said UOB spokeswoman Tan Ping Ping.

UOB ended the day 3.58 per cent or 83 cents higher at $24.03, and is up 13.4 per cent year to date. Over 4.35 million shares changed hands yesterday, more than double the daily six-month average of 2.17 million.

The Straits Times Index is up 3.99 per cent for the year.

DBS Group Holdings also did well yesterday. It rose 1.18 per cent to end at $17.17 and is up 0.41 per cent for the year. OCBC Bank closed unchanged at $9.40 and is down 7.84 per cent for the year as investors worry about a cash call from the bank to fund its US$5 billion bid for Hong Kong's Wing Hang Bank.

One analyst said banking counters are doing well overall (except for OCBC), and there are unlikely to be any new reasons for UOB's sharp rise.

UOB's outperformance has been attributed to its focus on Asean and its lower China exposure, as well as its strong capital ratio. China's slowing growth and growing shadow banking fears are frequently listed as concerns though many observers have said they do not expect a hard landing from the world's largest trading nation.

UOB is well capitalised and its margins will benefit from a sooner than expected rise in short-term rates in Q1 2015, said Macquarie Research earlier this month.