Wednesday, August 6, 2008


The price movements of Singapore banks are quite peculiar these few days. Take UOB for example, it has risen up to $20.14 today just because it has posted a 2% increase in profits. OCBC went up rather strongly yesterday and was undeterred by the poor results posted by Great Eastern, where it had an 80% stake. It went up to $8.55 today.

DBS however was “punished” for being late in dishing out its 2Q report. The behaviour of its stock price was very volatile, suggesting speculative activity towards its reporting day.

By right, when UOB have a good set of results, the prices of the other 2 banks will rally together. In fact, for the past 2 years before the eruption of sub prime crisis, the price range between UOB and DBS is $1 and usually DBS command the higher price due to its higher profits, NAV and dividend policy.

Of course, the exposure to CDOs reversed the trend and UOB share price begun to command a higher premium to DBS till today.

I am still quite puzzled on the rally of UOB share price. First, there was a cut in dividend payout. Last year, the interim dividend payout was 35 cents per share, versus 20 cents per share this year. Is there any reason to push its share price beyond the $20 mark, leaving DBS struggling behind at $18.50?

The thrilling PE ratio of UOB is about 14.5, compared to DBS 12.5. Again, I see DBS is trading at an attractive price relative to its peers.

Are there any surprises or skeletons in the closet waiting to hunt investors? I hope not! I believe DBS will come out with a decent set of results tomorrow.

In any case, I bought 1 lot of DBS @ $18.48 yesterday. I do hope to get a decent contra gain tomorrow or Friday! If not, it will become another dividend yielding stock in my portfolio.

Wish me luck!

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