RHB has downgraded its outlook for Singapore’s banking sector from “Overweight” to “Neutral” due to a subdued global macroeconomic environment and the impact of US President Donald Trump’s reciprocal tariffs. The financial services group has reduced its earnings forecasts for the sector by 2% to 3% for the fiscal years 2025 to 2027, affecting major banks such as OCBC Bank and United Overseas Bank (UOB), which have both been downgraded to “Neutral” from “Buy”.
The decision comes as RHB Economics adopts a more cautious stance on the global economic outlook, prompting a realignment of its sector view. “The pause provides investors with a reprieve and an opportunity to reposition,” the report noted, highlighting the potential for strategic adjustments in response to market volatility.
DBS remains RHB’s top pick, with the bank expected to maintain strong yields and capital returns despite the challenging environment. The report suggests that investors should stay focused on these aspects as they navigate the current market conditions.
This adjustment in RHB’s outlook reflects broader concerns about the impact of geopolitical tensions and economic policies on financial markets. As the sector faces these headwinds, the emphasis on yields and strategic positioning becomes increasingly crucial for investors.
Looking ahead, the banking sector’s performance will likely hinge on its ability to adapt to these external pressures whilst maintaining robust financial health. The ongoing developments in global trade and economic policy will continue to be closely monitored by market participants.
“`
