DMG & Partners said United Overseas Bank Ltd andOversea-Chinese Banking Corp Ltd may benefit from newrules to cool Singapore's property market by capping residentialloan tenures at 35 years.
Although the new rules will mean slower mortgage growth andlimit the ability of some property owners to refinance, banksthat recorded stronger housing loan growth in the last 2 yearsare in a better position to keep their customers without havingto be aggressive on interest rates.
Therefore, OCBC and UOB are expected to benefit as bothposted a 2-year housing loan growth of about 19 percent a yearon average, more than double of DBS Group Holdings' 8percent.
By 0207 GMT, shares of DBS were down 1.2 percent at S$14.28,while UOB dropped 1.1 percent at S$19.63 and OCBC fell 0.7percent to S$9.42.
UOB, with the highest percentage exposure to housing loans,is expected to gain the most, DMG said, maintaining its 'buy'rating on the bank with a target price of S$21.40.
For related story click 1011 (0211 GMT) (Reporting by Charmian Kok in Singapore;firstname.lastname@example.org); Editing by Jijo Jacob ***********************************************************
9:47 STOCKS NEWS SINGAPORE-Property stocks down after newmeasures
Singapore's latest measures to cool its property market bycapping the tenure of new home loans at 35 years, may result inlower transaction volumes for a few months before picking upagain, Nomura said.
At 0117 GMT, shares in CapitaLand Ltd , SoutheastAsia's largest property developer, were down 2.7 percent atS$3.21, while smaller rival City Developments Ltd fell1.3 percent to S$11.79.
Over the last three years, the average tenure for newresidential property loans has increased from 25 to 29 years andmore than 45 percent of new residential property loans grantedby financial institutions have tenures exceeding 30 years, theMonetary Authority of Singapore.
Nomura also noted that unless home buyers have amplecapital, mortgage repayment could now be 24-45 percent higher.The brokerage's top pick among Singapore residential developersis Keppel Land Ltd , as it trades at a discount of 41percent to its net asset value.
"In reality, however, we suspect the market will still findits way around the new rules," said Nomura, adding that negativeimpact on stock prices of developers is likely to be limited.
CIMB Research said the Singapore government's move waspre-emptive in nature and unlikely to hurt demand much, givenlow mortgage rates and demand for smaller units.
"While the impact on demand may be mild, the government'spledge to keep prices down signals further policy headwinds fordevelopers," said CIMB, which kept its 'neutral' rating on thesector. Its top picks include CapitaLand and CapitaCommercialTrust , for which it has 'outperform' ratings.
0919 (0119 GMT) (Reporting by Charmian Kok in Singapore;email@example.com; Editing by Prateek Chatterjee)
Keywords: MARKETS SINGAPORE STOCKSNEWS/PROPERTY