Singapore banks’ shares may be near the end of their rally as their first-quarter results represent a short-term top and business activity is expected to cool off in the coming quarters, said Macquarie Equities Research.
“We believe the rally in Singapore bank stocks is looking tired and we would look to pare down holdings at current levels,” Macquarie said in a report.
“We believe that upcoming quarters may look weaker for all, given slowing business activity (we assume) lack of major investment banking deals vs 1Q13," Macquarie said, adding that the sector as whole is trading close to fair value, and lacks operational catalysts to the upside.
It downgraded DBS Group Holdings and UOB to “neutral" from “outperform”, and cut its rating on Oversea-Chinese Banking Corp to “underperform” from “neutral”.
Banking shares have outperformed so far this year, with DBS rising 17%, OCBC up 15% and UOB gaining 11%. Singapore’s benchmark Straits Times Index has gained 9%. Singapore’s leading banks beat market forecasts with their earnings.
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