Dear readers, the Singapore Straits Times Index (STI) is now oversold with a RSI of below 30. With the overselling of the STI, the stocks of the three largest Singapore banks: DBS, OCBC and UOB are similarly oversold.
DBS stock closed at $19.80 yesterday (24 Sep 20). The stock is undervalued with a Price-to-Book ratio of 0.945 and at a dividend yield of 5.7%. Price-to-Earning ratio is 9.30
OCBC stock closed at $8.37 yesterday (24 Sep 20). The stock is undervalued with a Price-to-Book ratio of 0.777 and at a dividend yield of 5.2% Price-to-Earning ratio is 9.76
UOB stock closed at $18.95 yesterday (24 Sep 20). The stock is undervalued with a Price-to-Book ratio of 0.796 and at a dividend yield of 4.9%. Price-to-Earning ratio is 8.92
The Price-to-Earnings ratio of the Straits Times Index, based on the Straits Times Index ETF (ES3.SI) is 11.01. Comparing the Price-to-Earnings ratios of the three banking stocks with that of the Straits Times Index, it looks like these three banking stocks are rather cheap and somemore they are now undervalued and oversold.
But to me, the three banking stocks are not attractive yet. Remember the Price-to-Earnings ratio of the Straits Times Index in the 2008 financial correction is 6 which is about one-third deduction from the current price-to-earnings ratio of around 9 for the three banking stocks. Hence, to me, the prices of the three banking stocks would be very attractive if they correct by one-third of their price. Attractive price of DBS, OCBC, UOB stocks will then be:
DBS stock:$13.20
OCBC stock:$5.58
UOB stock:$12.63
That’s it for my insights today. I Thank you once again for your support of SG STOCKS INVESTING, your Money and Lifestyle magazine! I also run another blog Singapore Stocks Investing with similar useful insights! Connect with me here to follow the daily exciting and useful posts on these two blogs, Thank You for your support!
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