“The current spread between STI FY2024 and Monetary Authority of Singapore (MAS) 10-year (10Y) yield is at 2.36%, closer to an attractive 2.5% level,” the analysts write in their Aug 2 report.
The markets will go “sideways” over the next two to three months as the benchmark Straits Times Index (STI) moves between 3,350 points and 3,538 points, say DBS Group Research analysts Yeo Kee Yan and Foo Fang Boon.
This is due to investors taking profit on the index heavyweights, which are the three Singapore banks – DBS Group Holdings, Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (SGX:U11
) (UOB) – and Singapore Telecommunications (SGX:Z74) (Singtel), as they go ex-dividend this month. The volatility in the STI may also be attributed to the uncertainties from this year’s US presidential election, as well as the expectation of a rate cut by the US Federal Reserve (US Fed) in September. The cut will cap any upside uncertainties for the heavyweight banks but underpin the performance of lighter weight-cut beneficiaries, Yeo and Foo note.
