OCBC Investment Research expects Singapore's banking sector to benefit from fewer interest rate cuts by the US Federal Reserve, The Edge Singapore reported Thursday.
The US central bank recently cut the policy rate by 25 basis points, and policymakers expect only two additional reductions in 2025, compared with four previously, the report said.
As a result, analysts could raise their 2025 full-year earnings estimates for Singapore's three main banks, according to OCBC research head Carmen Lee.
Lee said the "higher for longer" rate regime, although aimed at taming US inflation, will positively impact Singapore's banks through stronger interest and noninterest income.
Meanwhile, double-digit global market gains in 2024 may be hard to replicate in 2025, but the Singapore market will show further strength, especially with its high dividend yield, Lee said.
According to consensus estimates, Singapore's Straits Times Index (STI) could hit a new peak of 4,100 points a year from now, the news outlet stated.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)
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