• The first five sessions of Nov have seen the STI rally 3.2%, bringing the STI total return in the 2024 year to 7 Nov to 19.1%. This has seen the combined market cap of the STI increase from S$500 billion to S$556 billion this year, and the broader Singapore stock market capitalisation increase from S$802 billion to S$853 billion. 
   
• The STI now has a 70% weighting in the Banks and Real Estate sectors, highlighting the importance of the price-to-book ratio as a valuation metric. Currently, the STI’s P/B ratio stands at 1.3x, compared to 2.5x when the STI previously reached its all-time high of 3,906.16 in Oct 2007.
   
• The STI Banks have reported 3QFY24 combined non-interest income has grown one-third from 3QFY23 levels. The combined NOII also rose 18% from 2QFY24 levels. This was the third consecutive quarter combined NOII surpassed S$4 billion, while combined Net Interest Income surpassed S$8 billion for an eighth successive quarter. 
   
• YZJ Shipbuilding remains the STI’s strongest gainer in the 2024 YTD, as seen in 2022, 2021 and 2017. The stock will join the MSCI Singapore Index from Nov 25, advancing to the Mid-Cap size segment per MSCI’s GIMI methodology. The Group also updated this week that Green vessels account for ~75% of its total orderbook value.
   

The first five sessions of Nov have seen the STI gain 3.2% to 3,673.49, bringing the STI total return in the 2024 year to 7 Nov to 19.1%. This has seen the combined market capitalisation of the STI increase from S$500 billion to S$556 billion this year, and the broader Singapore stock market capitalisation increase from S$802 billion to S$853 billion. In the 8 Nov morning session, the STI extended its gain to 3,730.97 This puts the STI within 5% of the 3,906.16 all-time high in Oct 2007.

The present STI P/B valuation at 1.3x, is less stretched that 2.5x when the STI (in its previous form) made the 3,906.16 high. The STI currently maintains a 70% weighting to the Bank Sector and Real Estate Sectors, highlighting the importance of the P/B ratio as a preferred valuation metric.

The STI has been buoyed from its strong Bank weightage this year. The trio of STI Banks, have averaged 33% total returns in the 2024 year to 7 Nov, which is line with the median total returns of APAC listed Banks with a current market capitalisation of more than S$50 billion. The current P/B ratio  premium over the 5-year average for the STI Banks is also consistent with trends observed across APAC. The Banks recent performances and institutional flows through to 7 Nov are tabled below.

All Data as of 7 Nov 2024, Source: SGX & Refinitiv. Note ADT refers to Average Daily Trading Turnover; NIF refers to Net Institutional Inflow.

The combined total income of DBS Group Holdings (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank has reached another quarterly record in 3QFY24. The combined Net Interest Income (NII) and combined Non-Interest Income (NOII) made new quarterly highs of S$8.49 billion and S$4.90 billion respectively. As illustrated below, 3QFY24 combined NOII has grown 33% from 3QFY23 levels. The combined NOII also rose 18% from 2QFY24 levels. This was the third consecutive quarter combined NOII surpassed S$4.0 billion, while combined Net Interest Income for an eighth successive quarter. 

Higher trading income was a common thread to the DBS, OCBC and UOB 3Q24 results and updates:

• DBS reported 3QFY24 net profit was up 15% YoY and 8% QoQ to S$3.03 billion. Total income increased by 11% YoY and 5% QoQ to S$5.75 billion, driven by balance sheet growth, record fee income from wealth management, higher treasury customer sales, and strong markets trading income. 3QFY24 loans increased 2% YoY in constant-currency terms. Asset quality remained strong, with the NPL ratio dropping to 1.0% and non-performing assets decreasing by 8% from the previous quarter. The Cost-to-income ratio (CIR) was 39% in 3QFY24. DBS also launched a S$3 billion share buyback programme. Shares will be bought on the open market and cancelled, marking the first time repurchased DBS shares will be cancelled. This programme is in addition to regular buybacks for employee share plans, last done in Mar 2020 at S$16.97 per share. The programme will reduce the CET-1 ratio by about 0.8 percentage points, as of Sep 2024. DBS emphasised this as part of a broader capital management strategy.
• OCBC reported a net profit of S$1.97 billion for 3QFY24, up 9% YoY and 2% QoQ. The strong 3QFY24 performance was driven by robust non-interest income growth and lower allowances. Increased wealth management activities boosted fee and trading income, with higher insurance income as well. The CIR improved to 38.5% on positive operating jaws. Asset quality remained resilient with the NPL ratio down to 0.9%. Customer loans grew 4% YoY on a constant-currency basis.  
• UOB posted a record S$1.6 billion core net profit for 3QFY24, up 11% YoY, driven by record highs in net fee income and trading and investment income. This performance was achieved through a diversified core franchise across wholesale, global markets, and retail businesses. Net fee income grew 7% YoY to a record S$630 million, led by wealth management fees. NII increased 1% YoY to S$2.5 billion, supported by 5% loan growth. Other NOII rose 70% YoY to S$744 million, boosted by record trading and investment income and strong customer-related treasury income. The CIR was steady in 3QFY24 at 41.5% on an enlarged income base and continued cost discipline. Asset quality remained resilient with a stable NPL ratio at 1.5%. The balance sheet remained robust with ample liquidity and a CET-1 ratio of 15.5%. 

The STI banks have ranked among the 10 strongest performing STI stocks in the 2024 year to 7 Nov while Yangzijiang Shipbuilding Holdings has been the strongest of the 30 STI stocks. Two key developments for the stock this week include: 

• Prior to the 7 Nov open, MSCI announced that Yangzijiang Shipbuilding Holdings will join the MSCI Singapore Index from the close of Nov 25, advancing to the Mid-Cap size segment per MSCI’s GIMI methodology. With the shipbuilder’s market capitalisation now at S$10 billion, this achievement is notable given the rising cut-off market cap thresholds for Developed Markets across all four MSCI reviews this year. Notably, in the November 2024 rebalance, Singapore stands out as the only Asia Develop Market with a net increase in MSCI Standard Index constituents.
• After the 7 Nov close, Yangzijiang Shipbuilding Holdings shared a 3QFY24 Business Update, noting its order book has grown from US$14.48 billion at the end of 2023 to US$22.14 billion as of November 7. For vessel delivery, 90% of the FY2024 target has been achieved, keeping the company on track to meet the full-year goal. Approximately 84% of YTD new order wins are classified as eco-friendly vessels, aligning with the green transition trend, with green vessels accounting for about 75% of the total order book value. Containerships remain the dominant vessel type.
   

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