UOB Kay Hian analyst Jonathan Koh has maintained his “overweight” recommendation on the Singapore banking sector as the banks’ exposures to Europe and Russia are minimal.
With the sanctions levelled against Russia, Koh writes that systemic risk to the sector is “elevated” but remains below the levels seen during past crises. “[This is because] Russia is not well integrated into the global financial system,” says Koh in his March 10 report.
“Financial linkages with other countries have been reduced since the European Union first imposed sanctions after Russia annexed Crimea and Sevastopol in 2014. Foreign central banks have not tapped on swap lines and repo facilities established by the Fed, indicating most countries didn’t experience dislocation in their financial systems,” he adds.