Saturday, 3 August 2019

Market Watch 2019 – SG Banks

In our previous post, we shared our plans to diversify our investment portfolio. Since then, my wife and I sold half of our OCBC shares at $11.50 and CPFIS’s STI ETF at around $3.41 to build up investment war-chest as well as protect overall profits in our CPF portfolio.

We kept a constant look out for trigger news e.g SG banks’ Q3 financial results this week, to gather information to help us assess the general impact from the trade war climate. Key points from CEOs of the three banks

DBS CEO - Source: Business Times

OCBC CEO - Source: Business Times

UOB CEO - Source: Business Times

To us, it is important to understand how the banks position themselves. We are keen on their strategy to support new business models and shifts in supply chain e.g. market positioning, shift in loan strategy, etc. Overall, we remained positive on the prospects in the Greater China and ASEAN market. To this end, my view is that OCBC and UOB are better positioned.

OCBC have strong exposure in Greater China, Malaysia and Indonesia. There were reports on their plans to increase stakes in Bank of Ningbo. If this materialises, OCBC’s deeper presence in Greater China could open up more opportunities to the wider Chinese market and position them well for China’s One Belt One Road initiative.

UOB have a good presence in Thailand and broad network in Malaysia, Indonesia and China. After setting up their digital bank in Thailand, there were reports of UOB considering to launch digital bank in Vietnam or Indonesia too. Both countries possess abundant opportunities. They are likely to come from the shift in supply chain from China to Vietnam, as well as from Indonesia's plans to shift their Capital which would require significant amount of infrastructure loans and investments. 

Trump’s tariff hike on Chinese imports had came in rather abruptly and have caused a stir to the stock market.

This looks like a buying opportunity... and our war-chest stands ready to fire.


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