Banks: CLSA notes that Singapore banks have suffered a sharp sell down since late Jul'15 with the sector's forward P/B sliding to 1.15x from 1.33x. It notes that given recent developments both domestically and abroad, it is likely that these banks will experience greater topline and asset quality pressure than previously anticipated.
The research house revises its FY15-17 earnings forecasts down by 1-10% with loan growth slipping to 1-4% (previously 3-7%), margin expanding by about 10-16bps (previously 11-21 bps) and bad debts to increase by 18-45 bps (previously 18 - 41 bps) as a % of average loans.
It notes that if the '98 AFC were to have a re-run, share prices would have a further 47-55% to fall. However, it notes that this is unlikely. Nonethless, positive catalysts for the banks remain scarce.
UOB (Overweight) is its top pick, with TP of $21 (previously, $25.30) and OCBC (Underweight), its least preferred Singapore bank, with TP of $9 (previously $10.60).