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May Recap: United Overseas Bank Ltd Dragged the Singapore Market Lower

It seems investors have indeed “sold in May and gone away” as the Straits Times Index (SGX: ^STI) slumped 8.3%, or 282 points, to around 3,118 last month. Of the 30 index components, the majority of them were in the red, with one flat and one ending in the green. The following shows some of the major market movers:

  1. United Overseas Bank Ltd (SGX: U11), or UOB, saw its shares plunge 15.6% to S$23.50 each, coming in as the biggest loser of the index.
  2. UOB’s peers, DBS Group Holdings Ltd (SGX: D05) and Oversea-Chinese Banking Corp Limited (SGX: O39), followed it in its tracks, falling 14% and 12.6% respectively.
  3. Shipbuilder Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) saw its share price tumble 12.7% to S$1.37.
  4. The only stock that finished May in positive territory was telco Singapore Telecommunications Limited (SGX: Z74). Singtel’s shares inched up 0.9% to S$3.20 apiece.

All three Singapore banks posted loan growth in their first quarters of 2019. UOB posted the best year-on-year loan growth at 12%, as compared to 5% each from the other two banks. Valuation-wise, as of 31 May 2019, UOB had a price-to-book ratio of 1.06 and a dividend yield of 4.3% excluding any special dividend.

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With the trade war not looking to end anytime soon, UOB, DBS, and OCBC could see more share price volatility. However, investors who have their eyes on the long-term could see an opportunity to pick up bank shares at low valuations.

Singtel had a mixed set of results for its full year ended 31 March 2019. Yearly revenue rose 4% to S$17.37 billion in constant currency terms due to growth in info-communications technology (ICT), digital services, and equipment sales from mobile connections in Singapore and Australia.

However, its bottom line tumbled 42% to S$3.10 billion, mainly on the back of a one-off gain seen last year. Excluding that, underlying net profit would have declined by 21%. At its share price of S$3.20, Singtel had a trailing price-to-earnings ratio of 17 and a dividend yield of 5.5%. To learn more about Singtel’s dividends, you can head here.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund which can be taken as a proxy for the Straits Times Index, was valued at a price-to-earnings ratio of 11.0 and had a distribution yield of 3.7% as of 31 May 2019.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommendations on DBS Group, United Overseas Bank, and Oversea-Chinese Banking Corp. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.