Singapore's benchmark Straits Times Index (STI) fell by 0.5% on Friday, losing 29.95 points to close at 5,509.43. The decline was primarily driven by losses among the city-state's three major banks, with a total of 1.2 billion securities valued at S$2.1 billion changing hands during the session.
Bank Performance
United Overseas Bank (UOB) led the declines, dropping as much as 3.8% during intraday trading before closing down 2.4% or S$1.03 at S$42.47. DBS Bank and OCBC also recorded losses, with DBS down 0.7% or S$0.52 to S$71.96, and OCBC falling 0.8% or S$0.22 to S$28.56. A note from Citigroup indicated that the market may have been "overly optimistic" regarding UOB's asset quality turnaround, suggesting that the bank's earnings could miss expectations when excluding one-off income.
Broader Market Trends
Across the broader market, decliners outnumbered advancers by 365 to 226. Thai Beverage was the top gainer on the STI, rising 3.4% or S$0.015 to close at S$0.455. Meanwhile, ST Engineering was the worst performer among STI constituents, losing 2.5% or S$0.27 to finish at S$10.43. Regional indices showed mixed results, with Hong Kong's Hang Seng Index down 1.8% and Japan's Nikkei 225 index falling 4%.
Analysts expect elevated market volatility in the coming weeks, particularly due to ongoing tensions in the Middle East and the potential impact on global markets.
The decline in Singapore's banks could pressure the financial sector, influencing investor sentiment and potentially leading to further volatility in bank stocks. Investors are likely to monitor the upcoming earnings reports for insights into banks' financial health. Watch for the second-quarter earnings announcements from DBS and OCBC, expected to provide clarity on their performance amid current market conditions.