SGX drops up to 6% on Downgrade, Spotlight on DBS, OCBC, UOB as FOMC looms
$SGX(S68.SI)$ came under selling pressure on Monday (14 September), falling more than 6% after Macquarie downgraded the stock to “Underperform” from “Neutral”, before recovering slightly to close 5.72% lower.
The stock extended its decline following the downgrade, falling a further 1.66% on Tuesday (15 September) before slipping approximately 0.6% as of 10:00am Singapore time on Wednesday (16 September).
Amplifying the move, the $SGX 5xShortSG280725(8I3W.SI)$ has surged ~45% since the close on 11 September, while the $SGX 5xLongSG280516(JLFW.SI)$ has fallen approximately 36% over the same period.
Looking ahead, attention turns to the FED rate decision this week, with markets pricing in more than 90% probability of a 25-basis-point rate hike.
Singapore banks could benefit if the rate increase materialises, supported by the potential uplift to net interest income.
$OCBC Bank(O39.SI)$ led gains on Wednesday morning, rising approximately 1.1% as of 10:00am Singapore time.
Correspondingly, the $OCBC 5xLongSG280223(9RWW.SI)$ gained approximately 5.5%, while the OCBC 5x Short DLC (9DAW) declined by a similar magnitude.
Investors with a bullish view can consider Long DLCs for leveraged exposure, while bearish investors can consider Short DLCs for inverse exposure across a broad range of U.S., Hong Kong and Singapore single stocks and index underlyings.
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- skippix·14:12DBS and UOB staying weak tells me the rate bump is mostly priced in. NIM helps, but softer loan demand can still drag the banks near termLikeReport
- DreamBig572·14:12Downgrade alone is a weak trigger to dump ngl, the rate decision matters more here. Feels like the call ignored the biggest variableLikeReport