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Business Times
29-04-2025
- Business
- Business Times
These Singapore names are potential winners from election Budget, tariff volatility: Maybank
[SINGAPORE] The Republic's domestic-oriented stocks could emerge as spillover beneficiaries amid tariff volatility in spite of Singapore's high trade dependency, said Maybank. That includes sectors such as property and consumer as potential winners, it said. In a Friday (Apr 25) research report, Maybank analyst Thilan Wickramasinghe said that the city-state could offer a 'relative safe haven' amid global growth challenges as tariffs create volatility. 'A low baseline tariff, resurging domestic demand from construction and an election Budget, plus a national balance sheet capable of delivering aggressive stimulus if needed, should provide some cushioning as markets reconfigure to the new world order,' he said. Singapore economy could absorb shocks, cushion tariff blow 'While Singapore's external trade dependency is high, we think the domestic economy may have bandwidth to absorb the worst of the shocks,' said the analyst. Maybank named two drivers: a construction boom, and the 2025 election Budget. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up A construction boom is under way, said the bank, with contracts awarded recording a 58 per cent year-on-year surge for the year up until February. This was driven by both public housing and private projects such as Changi Airport Terminal 5 or Tuas Port. The 2025 Budget is another area that is 'delivering generous transfers' which could boost domestic stocks, Wickramasinghe noted. 'The government has ample dry powder to introduce more fiscal stimulus,' he said. The estimated accumulated fiscal surplus over the current electoral term is S$14.3 billion or around 1.9 per cent of the gross domestic product, he said. This can be drawn over FY2025 without needing to tap past reserves. Moreover, the Singapore government has historically deployed strong stimulus during 'times of extreme stress'. For instance, during the global pandemic five years ago, fiscal stimulus was raised to 14.4 per cent of the GDP under the Covid-19 Stimulus Package alongside a further 8 per cent of GDP from past reserves drawdowns. 'Combined, these factors could support relatively better domestic earnings visibility,' he said. Potential winners The report screened Singapore-listed stocks with a market capitalisation above S$400 million that derive over 50 per cent of revenues locally, as these could benefit from domestic stimulus. As a secondary criterion, it surveyed stocks generating revenues from China and South-east Asia, which could gain on supply chain shifts from tariff arbitrage. 'Our screening shows property – especially real estate investment trusts (Reits) and construction – industrials, consumer and healthcare are potential winners,' said the analyst. He said that banks were excluded from the screening. 'While the sector derives more than 50 per cent of income from Singapore, they are much more directly linked to the global trade cycle, thus not fully reflecting pure domestic consumption.' Noting that stocks related to real estate and Reits accounted for more than half of the screened list, Wickramasinghe said that falling domestic benchmark rates should be a positive signal for Reits. Stress tests conducted under global financial crisis-level scenarios have indicated that retail and industrial rents would remain resilient, he added. Among the Reits, CapitaLand Integrated Commercial Trust , Frasers Centrepoint Trust and Mapletree Pan Asia Commercial Trust screened favourably, he added. Besides Reits, property development and construction companies – including Bukit Sembawang Estates and OUE – emerged as attractive opportunities. According to Wickramasinghe, industrial and utilities companies with long-term offtake contracts and strong order books are well-positioned to benefit domestically. These include names such as Sembcorp Industries and Keppel . Consumer and healthcare sectors could similarly see upside from 'domestic spillover demand driven by fiscal stimulus', he added, with screened names such as Kimly . Transport and communication companies such as SBS Transit and Vicom are expected to demonstrate resilience supported by steady domestic demand.
Mint
29-04-2025
- Business
- Mint
Singapore Banks Dominate With Buybacks at Four-Year High
(Bloomberg) -- Singapore lenders are taking advantage of recent weakness in their share prices to purchase stock, making up the bulk of total corporate buybacks that are set to be the biggest in the city-state in four years. The value of buybacks by DBS Group Holdings Ltd., Singapore's largest bank, account for nearly half of all the stock repurchases in Singapore from April 1 to April 23, followed by United Overseas Bank Ltd. at 25% and Oversea-Chinese Banking Corp. at just over 8%, according to data compiled by Bloomberg. Singapore banks, among the most well capitalized in the region, pledged in recent months to hand over billions of dollars in surplus capital to investors on the back of record-high earnings. Such action came in handy during global stock selloffs triggered by US President Donald Trump's tariff measures. Elsewhere, banks emerged as the biggest contributors to buybacks in Europe, while share repurchase plans announced in China this month have reached the most since a stock rout in February 2024. Maybank analyst Thilan Wickramasinghe said Singapore lenders have been carrying excess capital for some time, despite spending on recent deals and integrating them. However, he noted there may be risks that capital returns could be reassessed given the heightened uncertainty in the operating environment. Shares of DBS, UOB and OCBC fell to multi-month lows earlier this month as they joined a plunge in global equities, before paring losses. Investors are however concerned that weak economic growth would lead to interest rate cuts and impact banks' lending margins. Still, the lenders appear less vulnerable to US tariffs than their Southeast Asian rivals as supply-chain shifts are set to promote cross-border business, Bloomberg Intelligence said in a report this month. Singapore banks report quarterly results in May. Morgan Stanley's Southeast Asian analysts led by Nick Lord slashed earnings estimates of Singapore lenders by up to 11% for 2025, and 8%-11% for 2026. The bank said in a report that the main driver of the changes in estimates for 2025 is a 'pre-emptive provision charge based on deteriorating macro economic variables.' Despite the cut to earnings forecasts, Morgan Stanley left capital return forecasts unchanged as it expects the banks' 'fully loaded' common equity Tier 1 ratios to remain healthy, part due to lower loan growth and still-robust return on equity. Meanwhile, Goldman Sachs maintained a buy rating on the three banks, saying it favors stocks with 'robust and sustainable profitability and the capability to increase capital returns.' It expects excess capital for the trio to build up by 2027, given that the lenders remain capital generative. Jefferies analyst Sam Wong said that given that all three lenders are trading above their book value, buyback is not the most value accretive form of shareholder return. 'That said, a buyback mandate would allow the banks to provide some stability to share price in an uncertain environment, and to develop a more sticky investor base (versus any one-off special div),' Wong said in an email. --With assistance from Julie Chien. (Adds comment from Bloomberg Intelligence in 7th paragraph, updates charts.) More stories like this are available on First Published: 29 Apr 2025, 05:41 AM IST
Independent Singapore
28-04-2025
- Business
- Independent Singapore
Singapore banks drive share buybacks, set to be biggest in four years, after dip in share prices
SINGAPORE: Singapore banks are seizing the opportunity presented by recent dips in their share prices to buy back stocks, making up most of the corporate buybacks, which are on track to be the biggest in the city-state in four years. According to Bloomberg data, from April 1 to 23, buybacks by Singapore's largest bank, DBS Group Holdings Ltd., accounted for nearly half of the total corporate stock repurchases in Singapore, while United Overseas Bank Ltd. (UOB) made up 25% and Oversea-Chinese Banking Corp. (OCBC) just over 8%. Banks in the city-state, known for being among the most well-capitalised in the region, pledged in recent months to return billions of dollars in extra funds to investors after reporting record-high earnings. This move proved useful during global stock sell-offs caused by US President Donald Trump's tariff actions. The Edge Singapore reported that besides banks in the city-state, lenders in Europe also became the biggest contributors to buybacks, while in China, share repurchase plans announced this month hit the highest level since a stock sell-off in February 2024. Maybank analyst Thilan Wickramasinghe noted that while Singapore banks have had excess capital for some time, this could change due to growing uncertainty in the 'operating environment'. Shares of DBS, UOB, and OCBC dropped to multi-month lows earlier this month, along with the rest of the global market, but have since recovered some of their losses. Investors remain concerned that slow economic growth could lead to interest rate cuts and hurt banks' lending margins. Singapore banks are scheduled to report their quarterly results next month. Morgan Stanley Southeast Asian analysts, led by Nick Lord, downgraded their earnings estimates for Singapore banks by up to 11% for 2025 and between 8% and 11% for 2026. However, Morgan Stanley kept its capital return forecast unchanged, expecting the banks' 'fully loaded' common equity Tier 1 ratios to stay strong, helped by lower loan growth and steady returns on equity. Meanwhile, Goldman Sachs has maintained a 'buy' rating on DBS, UOB, and OCBC, praising their 'robust and sustainable profitability and the capability to increase capital returns'. The investment bank and wealth management firm expects the three banks to build up extra capital by 2027, given that they remain capital generative. Jefferies analyst Sam Wong raised some concerns, pointing out that the three banks are trading above their book value, meaning that buybacks may not be the best way to return capital to shareholders. However, he also noted in an email that 'a buyback mandate would allow the banks to provide some stability to share price in an uncertain environment and to develop a more sticky investor base (versus any one-off special div).' /TISG Read also: Investor confidence in S-REITs grows as Orchard Road malls hit record prices: DBS
Business Times
28-04-2025
- Business
- Business Times
Singapore banks dominate surge in share buybacks
[LONDON] Singapore lenders are taking advantage of recent weakness in their share prices to purchase stock, making up the bulk of total corporate buybacks that are set to be the biggest in the city-state in four years. The value of buybacks by DBS Group Holdings, Singapore's largest bank, accounts for nearly half of all the stock repurchases in Singapore from Apr 1 to Apr 23, followed by United Overseas Bank (UOB) at 25 per cent and Oversea-Chinese Banking Corporation (OCBC) at just over 8 per cent, according to data compiled by Bloomberg. Singapore banks, among the most well-capitalised in the region, pledged in recent months to hand over billions of US dollars in surplus capital to investors on the back of record-high earnings. Such action came in handy during global stock sell-offs triggered by US President Donald Trump's tariff measures. Elsewhere, banks emerged as the biggest contributors to buybacks in Europe, while share repurchase plans announced in China this month have reached the most since a stock rout in February 2024. Maybank analyst Thilan Wickramasinghe said Singapore lenders have been carrying excess capital for some time, despite spending on recent deals and integrating them. However, he noted there may be risks that capital returns could be reassessed given the heightened uncertainty in the operating environment. Shares of DBS, UOB and OCBC fell to multi-month lows earlier this month as they joined a plunge in global equities, before paring losses. Investors are still concerned that weak economic growth would lead to interest rate cuts and impact banks' lending margins. Singapore banks report quarterly results next month. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Morgan Stanley's South-east Asian analysts led by Nick Lord slashed earnings estimates of Singapore lenders by up to 11 per cent for 2025, and 8 to 11 per cent for 2026. The bank said in a report that the main driver of the changes in estimates for 2025 is a 'pre-emptive provision charge based on deteriorating macroeconomic variables'. Despite the cut to earnings forecasts, Morgan Stanley left capital return forecasts unchanged as it expects the banks' 'fully loaded' common equity Tier one ratios to remain healthy, partly due to lower loan growth and still-robust return on equity. Meanwhile, Goldman Sachs maintained a buy rating on the three banks, saying it favours stocks with 'robust and sustainable profitability and the capability to increase capital returns'. It expects excess capital for the trio to build up by 2027, given that the lenders remain capital generative. Jefferies analyst Sam Wong said that given that all three lenders are trading above their book value, buyback is not the most value accretive form of shareholder return. 'That said, a buyback mandate would allow the banks to provide some stability to share price in an uncertain environment, and to develop a more sticky investor base (versus any one-off special div),' Wong said. BLOOMBERG
