UOB soars 5% as OCBC jumps 3.4%; record highs drive STI to all-time peak
This comes as analysts raise their target prices for both lenders
[SINGAPORE] Shares of UOB and OCBC hit record highs on Friday (Jan 23), driving the Straits Times Index (STI) to an all-time peak.
UOB surged 5 per cent to a peak of S$39.50 at close, while OCBC jumped 3.4 per cent to a high of S$21.29 at the end of the trading day.
The lenders’ heavy weighting sent the STI up 1.4 per cent to a peak of 4,895.15 points, before it closed 1.3 per cent up at 4,891.45 points.
Momentum for UOB started building on Thursday, when it climbed 2.3 per cent. This came as Asian markets tracked Wall Street gains after the easing of tensions over Greenland, alongside a rating upgrade from Macquarie.
In a note on Wednesday, Macquarie analyst Jayden Vantarakis said that Singapore banks are poised to benefit from wealth asset management inflows given the city-state’s “safe-haven” status.
He also raised his call on UOB to “outperform”, with a lifted target price of S$41, and raised OCBC’s target price to S$21.50. Morgan Stanley expressed similar confidence in UOB, upgrading its target price from S$40.10 to S$40.40.
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UOB’s upgrades mark a sharp reversal in sentiment around what was seen as the weakest of the local banks.
At the start of the year, 64.7 per cent of analysts in a Bloomberg consensus had “hold” calls on UOB. The bank had been lagging its peers after it took much larger pre-emptive general allowances in its Q3 results, though it has been mounting a recovery since.
“The banks, especially UOB, have been catching up following a period of underperformance relative to DBS ,” said Morningstar equity analyst Kathy Chan.
She highlighted a brighter picture for interest rates: Markets now expect the US Federal Reserve to hold rates steady in March and April instead of cutting them immediately.
This delay is a boost for banks, including those in Singapore, as it prolongs the period they can earn higher interest on loans.
While rate cuts are still expected later in 2026, which usually squeezes lending profits, Chan said that rising fees from wealth management will likely help offset that impact.
Adding to the bullish view, Singapore Exchange market strategist Geoff Howie noted that trading turnover for both banks, as well as DBS, picked up in January compared to the preceding six months.
He pointed out that the lenders are attracting significant institutional capital, with OCBC topping the local market for net inflows.
Howie added that the three local banks’ fundamentals remain strong, with three years of combined quarterly net interest income of more than S$8 billion, alongside a historic S$5 billion peak in non-interest income in the third quarter of 2025.
UOB shares last peaked in March 2025, while OCBC crossed the S$20 mark for the first time on the third day of trading this year.
Broader sentiment remains bullish. Earlier this year, analysts forecast that the STI could breach 5,000 points by the end of 2026, supported by policy tailwinds, recovering earnings and a revitalised initial public offering market.
The index crossed the 4,700 level on the third trading day of the year and is now within touching distance of the 4,900 mark.
Singapore’s macroeconomic environment has also been supportive, with the city-state’s gross domestic product expanding by a higher-than-expected 4.8 per cent in 2025 after a robust fourth quarter.
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