This week, the Straits Times Index (STI) ended at 3326.52 points, down marginally from the week before. The main driving force for this was a decline in banking stocks, with DBS losing close to 2.7% after reporting potential headwinds from the group’s oil and gas exposure. Similarly, OCBC and UOB lost 1.0% and 1.2% of their value on Friday (4 August 2017).
During the week, Noble Group was another stock that came under pressure with Iceberg Research releasing another scathing report on the company questioning the company’s financials as well as the regulators on their role monitoring the company and allowing investors to continue being abused by its fund-raising activities.
Elsewhere in the region and globally, markets were slightly up. Hong Kong’s Hang Seng Index (HSI) continued to tick upwards, gaining 2.2% to end at 27,562.68 points, its highest since May 2015. Over in the US, the Dow Jones Index gained 1.2% to continue scaling all-time high levels.
Beside the three local banks, the Financials sector on SGX also includes other sub-sectors such as companies within the insurance, capital markets, financial services and consumer finance segments.
Some of these companies include Finance company Hong Leong Finance, brokers UOB-Kay Hian Holdings Limited, insurers Great Eastern, online investor platform iFAST Corporation and the Singapore Exchange (SGX) themselves.
This is a diverse group of companies that have continued to see rising investor interest in them. According to an SGX announcement, the Financials sector recorded the largest institutional investment in July 2017, adding $359.3 million in investments.
DBS Group (SGX: D05)
DBS released its results on 4 August 2017. Despite announcing positive 2nd quarter set of results with an 8% rise in net profit to $1.14 billion on the back of marginally higher revenue, its shares saw a decline of close to 2.7% after it warned that there may be bigger allowances than expected from the continued weakness of the oil and gas segment.
Together with its results announcement, it declared a dividend of $0.33 for each share. This roughly translates to an annualised dividend yield of more than 2.9%.
Over the past 52 weeks, DBS, Singapore’s largest bank by market capitalisation, has gained close to 50.0% in returns.
Oversea-Chinese Banking Corporation (OCBC) (SGX: O39)
OCBC is Singapore’s second largest bank by market capitalisation. It released its 2nd quarter results recently as well on 27 July 2017. Like DBS, it reported higher net profit of $1.08 billion, which was 22% higher than a year ago, on the back of improved revenue.
The bank however issued a positive note on its prospects, highlighting strong consumer sentiments in key economies even as overall growth is expected to be moderate. It also announced a dividend of $0.18, translating to an annualised yield of 3.2%.
This caused a spike in its share price of over 2.1% on the day it released its results. Over the past week however, its share price has moderates as other companies in the Financials segment released their results and cautious stance in the economy.
Overall, OCBC has risen by 39.4% over the past 52 weeks period.
United Overseas Bank (UOB) (SGX: U11)
No list of companies in the Financials segment is complete without Singapore’s trip of banking stocks. UOB released its 2nd quarter announcement on 28 July, reporting a 5.5% increase in net profit to $845 million. It mimicked the other banks improvements in revenue as well.
During its announcement, it posted a dividend per share of $0.35, which means it is delivering an annualised yield of close to 2.9%.
The bank similarly suffered a sell-off at the tail end of this week after DBS posted some worries surrounding its exposure to the oil and gas sector. Despite a 1.2% decline on Friday (4 August 2017), it has delivered a return of nearly 38.9% over the past 52 weeks.
Great Eastern (SGX: G07)
Great Eastern is the insurance arm of OCBC, which owns nearly 87% of the company. Great Eastern released its results on 25 July 2017, posting a 173% improvement in its net profit to $279.5 million.
This also meant that majority of this gains flowed into OCBC’s announcement when it released its results a few days later. It also announced that it will be distributing a dividend of $0.10 per share, which takes its yield to close to 2.0% per annum.
Over the past 52 weeks, Great Eastern has delivered a more modest return of close to 19.7%. This is, of course, when compared to its banking counterparts.
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