SGX drops up to 6% on Downgrade, Spotlight on DBS, OCBC, UOB as FOMC looms

$SGX(S68.SG) came under selling pressure on Monday (14 September), falling more than 6% after Macquarie downgraded the stock to “Underperform” from “Neutral”, before recovering slightly to close 5.72% lower.

The stock extended its decline following the downgrade, falling a further 1.66% on Tuesday (15 September) before slipping approximately 0.6% as of 10:00am Singapore time on Wednesday (16 September).

Amplifying the move, the  $SGX 5xShortSG280725(8I3W.SG) has surged ~45% since the close on 11 September, while the$SGX 5xLongSG280516(JLFW.SG) has fallen approximately 36% over the same period.

Looking ahead, attention turns to the FED rate decision this week, with markets pricing in more than 90% probability of a 25-basis-point rate hike.

Singapore banks could benefit if the rate increase materialises, supported by the potential uplift to net interest income.

$OCBC Bank(O39.SG)  led gains on Wednesday morning, rising approximately 1.1% as of 10:00am Singapore time.

Correspondingly, the $OCBC 5xLongSG280223(9RWW.SG) gained approximately 5.5%, while the $OCBC 5xShortSG281123(9DAW.SG) declined by a similar magnitude.

Investors with a bullish view can consider Long DLCs for leveraged exposure, while bearish investors can consider Short DLCs for inverse exposure across a broad range of U.S., Hong Kong and Singapore single stocks and index underlyings. 

View the full list of DLCs here. 

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