Date: November 11, 2024
- The STI jumped to a 17-year high, up 4.8% at 3,724.37
- Gains here were not broad-based and came mainly from the banks
- UOB led the way with 11.1% jump, DBS rose 9.4% and OCBC 5.8%
- Wall St posted stunning gains after Trump win – but bond yields rose
- As expected, the US Fed cut rates by 25 points
- DBS reported 17% rise in Q3 profit to S$3.03b
- UOB reported 16% rise in Q3 profit to S$1.61b
- OCBC reported 9% rise in Q3 profit to S$1.97b
- Great Eastern’s Q 3 profit rose 52% to S$273.4m
- SingPost’s 1H profit rose 97.3% to S$22.6m
A new 17-year for the STI, courtesy of the banks and Trump win
Boosted by better-than-expected results reported by the three banks and stunning gains on Wall Street in reaction to a Trump victory in the US presidential election, the Straits Times Index not only smashed through the 3,600 level but also the 3,700 mark.
However, the gains were not broad-based – when the STI recorded its largest gain of about 71 points or about 2% on Thursday after DBS reported record results and the US presidential election results were known, the broad market actually recorded an advance-decline score of 278-306.
Similarly, when the STI followed this gain with a 51-points or 1.4% jump on Friday to climb above 3,700 for the first time in 17 years, the advance-decline score was an almost even 297-283.
Whatever the case, average daily volume spiked up to S$1.65b versus S$1.32b the week before in a week where the STI surged 169 points or 4.8% to 3,724.37.
How Wall St fared – record highs for all indices…
The Dow surged 1,508 points, or 3.6%, on Wednesday after results of the election were known, the Dow’s largest post-election gain since it rose 4.5% in November 1896, according to Dow Jones Market Data.
The S&P 500 also rallied 2.5%, while the Nasdaq Composite stormed 3% higher. All three indexes finished the day with record closing highs.
Though most of the market was rallying, the top sectors were financials, energy, and industrials. Wall Street is betting that Trump stances on tax cuts, drilling, and an easing of regulatory scrutiny will be a boon for such stocks.
“During the 2016 election, the S&P 500 Index gained nearly 5% from the day before the presidential election through the end of the year in what became known as the Trump rally. We expect a similar trend could play out this time around, too,” Marc Pinto, head of Americas Equities at Janus Henderson Investors was quoted as saying in US newspaper Barron’s.
“Longer term, though, history shows equity markets are more likely to be indifferent to whichever party is in power’’.
For the week, the S&P 500 soared 4.7%, while the Nasdaq Composite jumped 5.7%. The Dow Jones Industrial Average climbed 4.6%.
…but bond prices fell, pushing yields higher
Bond prices slipped, as traders considered the impacts of Trump policies on inflation, the national debt, and the path forward for interest rates. The yield on the 2-year Treasury note was up to 4.266%, while the 10-year yield was up to 4.425%. The 30-year yield posted its largest one-day gain since June 13, 2022 to 4.602%.
Analysts were quoted as saying they expect a larger budget deficit under the new administration to put upward pressure on yields, especially at the long end of the curve.
As expected, the Fed lowered rates by 25 basis points
The Federal Reserve cut interest rates by a quarter of a percentage point on Thursday in a move that preserves flexibility as officials contend with a cooling labour market and lower inflation.
Tuesday’s election didn’t alter the Federal Open Market Committee’s policy path, with officials moving ahead with a rate cut as expected before the vote. The latest decision means the target range for the federal-funds rate is now 4.5%–4.75%.
The 25 basis-point cut comes after Fed officials lowered rates by an aggressive 50 basis points at their previous meeting in September.
DBS’s stock crossed $S$40 after 17% rise in Q3 profit to S$3.03b, S$3b buyback plan
DBS said its Q3 net profit rose 17% on year to S$3.03 billion from S$2.59 billion, exceeding the S$2.76 billion average forecasted in a Bloomberg analyst poll. Total income rose 11 per cent to S$5.8 billion from broad-based growth.
On the commercial book level, net interest income rose 3 per cent to S$3.8 billion due to balance sheet growth and a stable NIM at 2.83 per cent.
An interim dividend of S$0.54 for each ordinary share was declared, resulting in estimated total dividends payable of S$1.54 billion, and up from S$0.48 per share in the same period a year earlier.
Additionally, DBS’ board has established a new S$3 billion share buyback programme where the bank’s shares will be purchased in the open market and cancelled.
The programme marks the first time that repurchased shares will be cancelled. Buybacks under it will be carried out at the management’s discretion, subject to market conditions.
The Business Times quoted Citi analyst Tan Yong Hong saying that since the latest quarter’s interim dividend remained unchanged from that of the second quarter of FY2024, the share buyback plan was a key highlight of the bank’s announcement this earnings season.
This year’s Q3 interim dividend will be paid out on or about Nov 25.
For the week, DBS’s shares rose S$3.65 or 9.4% to S$42.40.
UOB’s Q3 profit up 16% to S$1.61b, considering share buybacks
UOB reported a 16 per cent rise in Q3 net profit to a record S$1.61 billion, beating the S$1.51 billion consensus forecast among four analysts polled by Bloomberg.
Net fee income for the quarter rose 7% on year to a record S$630 million, driven by growth in wealth management fees. The group observed healthy trade and wealth demand, on top of a pick-up in card fees.
At the results briefing, UOB CEO Wee Ee Cheong said with around S$2 billion to S$2.5 billion in excess capital from Basel IV reforms, the bank is open to investing it in growth, or returning it to shareholders, whether through share buybacks or more dividends.
For the week, UOB’s shares jumped S$3.59 or 11% to S$35.69.
OCBC’s Q3 profit up 9% to S$1.97b
OCBC’s net profit for the third quarter ended September rose 9% to S$1.97 billion, beating the S$1.9 billion Bloomberg consensus.
Total income rose 11% year on year to S$3.8 billion with non-interest income climbing 41% to S$1.37 billion. Net fee income was up 10% at S$508 million, underpinned by higher wealth management, investment banking and loan-related fees.
Net trading income more than doubled to a new quarterly high of S$508 million; insurance income from the lender’s insurance arm, Great Eastern, rose 6% to S$233 million, buoyed by underlying business performance.
For the week, OCNC’s shares rose S$0.88 or 5.8% to S$16.06.
Great Eastern’s Q 3 profit rose 52% to S$273.4m
Insurance giants Great Eastern reported a 52% year-on-year increase in net profit to S$273.4 million for the third quarter ended September. The group’s new business embedded value amounted to S$176.9 million, up 7%.
Total weighted new sales for Q3 was, however, down 7% at S$390.8 million, from S$419.4 million previously. The decline came amid lower single premium sales over the quarter this year, following the shift towards regular premium sales, said Great Eastern in a business update.
For the nine-month period, net profit was up 39% at S$860.5 million, driven by contributions from its insurance business and favourable investment performance from shareholders’ funds.
Total weighted new sales was up 19% on the year at S$1.4 billion, and new business embedded value rose 13% to S$515.8 million.
By segment, profit from insurance business was up 17% at S$638.1 million, mainly due to higher contract service margin and risk adjustment release from the life insurance unit.
Meanwhile, earnings from shareholders’ fund surged 201% for the nine-month period to S$222.4 million. The higher profit was mainly due to higher interest and dividend income, as well as mark-to-market gains in equities and collective investment schemes, added the group.
SingPost’s 1H profit rose 97.3% to S$22.6m
Singapore Post (SingPost) reported a 97.3% jump in net profit for the first half ended September to S$22.6 million and a 20% rise in revenue to S$992.4 million.
Earnings per share (EPS) excluding distributions to perpetual securities holders stood at S$0.0076, up 181.5% from S$0.0027 in H1 FY2023. The group declared an interim dividend of S$0.0034 per share to be paid out on Dec 2 this year.
The postal services provider said that revenue growth in its Australia and Singapore segments helped to offset declines in international cross-border business, which continued to “face a difficult business environment”.
Revenue of the Australia business increased 44.1% year on year to S$574.8 million, while operating profit rose 30.2% to S$30.4 million.
In Singapore, revenue for the group’s postal and logistics business rose 12.4% to S$129.6 million on higher contributions from the delivery business, after it implemented a postage rate increase in October 2023. The segment’s operating loss for H1 narrowed to about S$900,000 from S$14.7 million previously.
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