SINGAPORE (June 26): UOB KayHian is maintaining its “overweight” on Singapore’s banking sector given the outlook for higher domestic interest rates is intact as US GDP growth is expected to be sizzling hot at 3-4% in 2Q18.
Four hikes in Fed funds rate are now expected this year, instead of the three previously expected. Continued strength in the US dollar would provide uplift to SIBOR and SOR over time. The escalation of trade conflicts dampens growth prospects due to the potential slowdown in global trade.
“We lowered our target prices for DBS to $30.15 and OCBC to $14.28,” says Jonathan Koh in a Tuesday report.