DBS, OCBC Surge to Records as Singapore Banks Dominate STI Rally

DBS Group and Oversea-Chinese Banking Corporation both closed at record highs on Thursday, driving Singapore's benchmark Straits Times Index to its strongest session in weeks. The twin gains underscored renewed investor appetite for Southeast Asian banking stocks as regional economic data pointed to resilient corporate earnings. Trading volume on the Singapore Exchange exceeded its 30-day average, reflecting broader market participation beyond the banking heavyweight.

STI Posts Strongest One-Day Gain in a Month

The Straits Times Index finished the session up 1.8 percent at 3,247.6, its highest close since mid-September. It marked the benchmark's best single-day performance since the Fed's September rate decision triggered a regional rally across Asian equity markets. The index was buoyed across the board, with financial stocks accounting for roughly 60 percent of total index gains. Singapore Exchange data showed turnover reached 1.2 billion shares, above the trailing 30-day average of 890 million.

DBS Extends Its Bull Run

DBS closed at S$38.42, up 2.3 percent from Wednesday's finish. The bank has now gained 18 percent over the past three months, outpacing the broader STI by a wide margin. The lender's performance was driven by strong net interest income growth and a continued decline in loan loss provisions. Analysts at Maybank Securities raised their 12-month price target for DBS to S$41, citing the bank's exposure to rising Singapore interest rates that typically widen net interest margins.

OCBC Matches Record Close

OCBC finished at S$13.68, climbing 1.9 percent to match its all-time closing high set earlier this month. The bank's latest quarterly results showed net profit rising 12 percent year-on-year, helped by fee income from its wealth management division. OCBC's insurance subsidiary Great Eastern Holdings contributed an additional boost, reporting better-than-expected claims experience in the third quarter.

Wealth Management Fuels OCBC Momentum

The lender's wealth management business attracted S$4.2 billion in net new assets during the first nine months of 2024, a 15 percent increase from the same period last year. This influx of deposits and managed assets provides OCBC with a stable, fee-based revenue stream that insulates it from interest rate volatility affecting traditional lending margins. The division now oversees more than S$250 billion in assets under management across its Singapore, Hong Kong, and Malaysia operations.

Why Banks Are Leading the Charge

Singapore's lenders stand to benefit disproportionately from the current interest rate environment, where the Monetary Authority of Singapore has allowed the local dollar to appreciate against a backdrop of elevated US rates. A stronger Singapore dollar reduces the cost of importing capital while the high-rate regime sustains lending margins. The banks' exposure to regional trade finance and corporate lending across ASEAN also positions them to capture growth as supply chain diversification benefits Southeast Asian economies.

Market Reaction and Investor Flows

Foreign institutional investors were net buyers of Singapore equities for the third consecutive session, with banking stocks accounting for the bulk of inflows. Data from Refinitiv showed net foreign buying of S$312 million in Singapore-listed equities on Thursday. Retail investors also piled in, with the Singapore Exchange reporting a spike in margin trading accounts active for the first time in six months.

What Comes Next for Singapore Equities

Investors will watch October's purchasing managers' index data, due next Tuesday, for signals on Singapore's manufacturing sector. The report follows a string of stronger-than-expected export figures that have underpinned optimism about the city-state's economic trajectory. DBS and OCBC both report their third-quarter earnings in the week of November 11, and analysts expect further upside if credit costs remain contained. The next Monetary Authority of Singapore policy meeting is scheduled for January, where analysts broadly anticipate no change to the appreciation path for the Singapore dollar, keeping the rate tailwind intact for bank earnings into 2025.