Analysts see Singapore bank profits fall; ICE plans livestock futures

Moody’s finds U.S. private credit defaults run higher than reported rate

Citi analyst Yong Hong Tan forecast in a note that Singapore’s three largest banks — UOB, DBS and OCBC — will report third-quarter profit declines of 4% to 10% from the prior quarter. Citi expects UOB’s third-quarter profit at S$1.35 billion, down 9% on quarter; DBS at S$2.94 billion, down 4%; and OCBC at S$2 billion, down 10%. Softer-than-expected wealth management fees guidance with third-quarter results could catalyze a de-rating of the Singapore banking sector, Tan said, adding that the guidance would fall short of expectations for growth in the mid-teens and that net interest income is another risk. DBS shares were down 1.05% at S$73.56, OCBC was flat at S$28.99 and UOB was up 1.1% at S$41.51.

The Intercontinental Exchange said this week it will launch live cattle futures, feeder cattle futures and lean hog futures, with the contracts scheduled to begin trading on Dec. 7. Analysts see the move as a direct challenge to the CME’s longstanding dominance in livestock futures. “The decision to enter livestock represents a significant competitive development, particularly as market participants evaluate execution costs, trading technology, liquidity, and alternative hedging opportunities,” PJ Quaid of StoneX said in a note. ICE said June 2027 will be the first month it offers a physically delivered live cattle contract.

Citi analyst Judy Zhang said Bank of Communications’ third-quarter earnings are likely to be strong, helped by a CXMT mark-to-market gain and stable net interest margin and asset quality. Zhang expects earnings growth to accelerate to about 9.3% on year, likely the second-highest among big banks, which could lift full-year 2026 earnings growth. The CXMT gain could boost revenue by a high-single-digit percentage and earnings by a high-teens percentage, Zhang said. Citi opened a 30-day upside catalyst watch on the stock and kept a buy rating with a target price of 10.31 yuan. Shares were up 1.0% at 8.08 yuan.

The IMF said the AI investment boom is contributing to pressures lifting Asian borrowing costs. Heavy debt issuance by AI-related companies, alongside worsening fiscal positions in major economies, has helped raise the extra compensation investors demand for holding longer-term bonds, the IMF said. Long-term sovereign yields have risen 40-60 basis points across most Asian economies this year. Domestic concerns, including perceived fiscal risks in Japan and policy uncertainty in Indonesia, have added pressure in some markets, though overall regional financial conditions remain relatively accommodative, the IMF said.

The won’s divergence from the yen may be more due to the AI boom than to interest-rate differentials, the IMF said. The Japan-Korea bond yield gap hasn’t widened significantly, and markets have priced in somewhat higher policy rates in both countries. Yet the won gained 11% against the yen between July 1 and Sept. 3. That pattern is more likely explained by the AI boom’s impact on current and capital accounts, the IMF said: Korea’s semiconductor windfall and companies’ conversion of export earnings into won support the currency, while Japan’s overseas investment income is generally reinvested abroad.

China’s export strength has a broadly neutral net effect on production in most sectors across the bulk of Asian economies, the IMF said, complicating the picture of a uniformly damaging export surge. Competition from Chinese finished goods hurts some producers, while cheaper Chinese components help others. The aggregate balance masks risks: shocks to Chinese finished-goods exports displace rival suppliers, with imports from non-China sources falling about 3% after four years. Employment losses can be more pronounced in labor-intensive industries such as textiles and apparel, according to the IMF.

Credit stress in the U.S. private credit market could be greater than reported default rates suggest, Moody’s Ratings said in a note. The ratings agency found a 4.0% default rate among credit-estimate issuers in the 12 months ended June, but estimated the rate at 5.8% when including events such as payment-in-kind amendments and maturity extensions among distressed issuers. Business and consumer services and software account for half of defaults, likely due to their large representation in the broader credit-estimate and leveraged-finance universe. Several issuers have maturities due in 2027 and 2028, which could increase default pressure, Moody’s analysts said. “This will leave many of the more vulnerable reliant on extensions, payment-in-kind amendments, costly refinancing or sponsor support,” Moody’s said.

Citi analyst Nigel Pittaway said he is broadly encouraged by Australian wealth manager AMP’s third-quarter update. Momentum appears solid, with managed portfolios and retirement products both growing strongly, Pittaway told clients in a note. The development of new tools to help advisor efficiency supports his optimism that this momentum can continue. Net cash outflows in superannuation and investments are less positive, though flows were much improved compared with a year earlier, Pittaway said. Citi kept a buy rating on the stock with a target price of A$2.60. Shares closed flat at A$2.40.