Who Had Been Buying and Selling the Shares of Singapore Banks?

Since bottoming around January – February 2016, the share prices of DBS, UOB and OCBC listed in Singapore Stock Exchange had gained 100% - 150% from trough-to-peak in April 2018.

Chart 1

An analysis of the monthly institutional fund flow into the Singapore Financial sector, which comprises of major banks and financial companies, may shed some lights into their share price movements. Institutional fund inflow would mean net buying by such as endowment funds, commercial banks, mutual funds, hedge funds, pension funds and insurance companies and institutional fund outflow would mean aggregate selling by them.

Chart 2

As seen from the chart 2, there was a huge net inflow of S$1 bil from the institutional investors in the month of Nov 16 and since then to Apr 18, there had not been any period of significant outflow of > S$300 mil nor continuous outflow for more than consecutive two months. The three-months moving average of net fund flow had also stayed above the zero line during this period.

Chart 3

These fund inflows from the Institutional Investors aka the Big Boys, had been accompanied by an almost continuous rally in ST Financial Index since Nov 16.

If the Big Boys (“BBs”) had been the buyers during those period, then who had been selling to them?

Chart 4

However, the net institutional inflow was interrupted in May 18 and had recorded a consecutive three months of S$710 mil outflow as well as a correction of more than 10% of the FTSE ST Financial Index. 

So has the rally in the Financial sector ended or it is just a temporary profit taking by the BBs? Is this the opportunity for the retail investors to buy it cheap from the Big Boys or they should clear out of the way of the BBs?

According to a report by Channel NewsAsia,

“Over the past week, OCBC and UOB announced second-quarter net profit results that beat market estimates, while DBS posted a weaker-than-expected net profit gain for the same period as the impact of business volume growth was moderated by lower trading income.

Even as all three banks flagged concerns about a slower home loan market following the recent property cooling measures, analysts remained positive. “

If the analysts are correct, would BBs stop the selling and flow back into the banks? It would be interesting to watch the tracks of the BBs in the coming months.

Connect @ Facebook



Read Disclaimer