Singapore banks are 'full of value,' says veteran fund manager Hugh Young

Published Wed, Sep 8 202110:00 PM EDT

Singapore banks don't offer "the most exciting growth" prospects — but they're "full of value" and make better investments compared with Chinese banks, said Hugh Young, chairman for Aberdeen Standard Investments Asia. "I think generally we're far more comfortable with Singapore banks," Young said Wednesday during CNBC Pro Talks with Mandy Drury when asked for his outlook on banks in China and Singapore. Government control over the financial system in China means that banks can be asked to lend to key industries for non-commercial reasons, noted Young. In comparison, Singapore banks are run "very commercially," and regulated by "very strong" authorities that ensure clear rules and require lenders to hold sufficient reserves, he added. "Generally, banking in China I would keep light," said the veteran fund manager. "We actually like the banks in Singapore and have far more exposure to Singapore banks in our portfolios than we do to China banks," said Young. He added that his firm's portfolios have "chunky holdings" in the two largest Singapore-listed banks, DBS Group Holdings and Oversea-Chinese Banking Corp . Stock performance Shares of DBS and OCBC have so far this year climbed 20.1% and 15.1%, respectively. Their smaller peer United Overseas Bank has jumped 12.7%. All three banks are beating the benchmark Straits Times Index , which has risen around 7.9% this year. Meanwhile, the Hong Kong-listed shares of three of China's big four banks have posted losses for the year so far. Industrial and Commercial Bank of China lost 11.7%, while China Construction Bank and Agricultural Bank of China fell 3.7% and 3.9%, respectively. Bank of China is the only large Chinese lender that climbed year to date, gaining around 4.2% as of Wednesday. Despite the run-up in share prices of Singapore banks, Young said he would still buy the stocks at current levels. He added he hopes dividend yields would increase after the financial regulator, the Monetary Authority of Singapore, lifted restrictions on bank dividend payments . Earnings of all three Singapore-listed banks have improved this year as the global economy recovers from a slump caused by the Covid-19 pandemic. In the second quarter, DBS, OCBC and UOB all reported financial results that beat expectations .