To The Moon

The crown of Singapore stock market is undoubtedly DBS, our local banking giant whose market cap has crossed USD100 billion, the only other local company to do so besides SEA that has since fallen from grace after the initial e-commerce frenzy at the onset of the COVID pandemic.

DBS has been trading around its all-time high $49.21 lately, lifted by generally positive market sentiments. In particular, DBS has been reporting strong earnings in the recent quarters and rewarding its shareholders with increasing dividend and capital returns, and the market is expecting its winning streak to continue in the near future. It helps that the yield curve appears to be steepening, reversing the inversion of late 2022. That helps banks' business model of borrowing short and lending long, boosting net interest margins. Furthermore, investors expect the Federal Reserve to start trimming its rates in the later part of this year, which could help to reduce banks’ funding costs while lending rates remain elevated—further expanding margins.

However, DBS is not shielded from macro headwinds such as trade tensions and geopolitical conflicts, as they may restrain loan growth as companies refrain or delay their investments and expansion and individuals avoid big spending and borrowing amidst economic uncertainty. Hence, I expect some volatility ahead of its scheduled earnings announcement on 7 August.

Nevertheless, I’m hopeful that the bank will be bringing cheers to the market when it presents its report card on its latest quarterly financial results, that would be the catalyst pushing breakout above $50.

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