OCBC to boost research in rival market Hong Kong

SINGAPORE: Singapore’s secondlargest lender has decided that the best place to expand its research is the country’s rival market Hong Kong.

Oversea-Chinese Banking Corp (OCBC) planned to add coverage of 60 Hong Kong-listed stocks, with 14 to 20 started by year-end, according to Carmen Lee, its head of research. That would supplement the roughly 50 firms already tracked by Bank of Singapore Ltd, OCBC’s private banking unit, she said.

OCBC previously invested in mid-cap coverage of Singapore stocks in an attempt to dominate that area of its home market. But it was difficult to generate trades because the companies were too small for many clients, said Lee.

“Hong Kong is now our No. 1 overseas market. The names are so familiar. Everyone knows about Ping An Insurance Group, China Life Insurance, Tencent Holdings and Baidu.”

Lee’s team had already started coverage of China Evergrande Group, Fosun International Ltd and China State Construction International Holdings Ltd, she said. The firm initiated coverage on China Evergrande and Fosun this month and China State Construction last month.

Hong Kong’s stock market had average daily turnover of HK$95 billion (RM51.61 billion) last month, compared with less than S$1.15 billion (RM3.58 billion), here.

Singapore stock exchange has accelerated efforts in past months to increase trading, as its average daily value of shares traded remains at less than half its average level of S$2.4 billion in 2007. A penny-stock rout in 2013 shook confidence in the markets.

Nevertheless, OCBC remained focused on its core home market, said Lee.

She prefers mid-cap property developers, here, and says domestic bank shares could continue to rise, even though they’ve become more expensive. (OCBC itself, for example, has gained 29 per cent this year alone and now trades at 12.9 times reported earnings, versus its five-year average of 10.5 times.) Bloomberg