UOB’s hiring halt a sign of further dividend cuts?; USD/SGD keeps falling

Analysts say UOB’s latest cost-cutting measures could portend more dividend cuts in 2020. Meanwhile, dovish fiscal expectations keep the USD pressured.

  • UOB, Singapore's third largest bank, to freeze headcount until December 2021
  • Analysts say the bank 'looks set to reduce operating expenses aggressively'
  • USD/SGD drops for a third straight day ahead of US Federal Reserve meeting

UOB’s hiring freeze hints of dividend cuts: analyst

United Overseas Bank (UOB) has reportedly imposed a freeze on all hiring, wage increments and promotions.

Earlier this week, the bank sent an internal memo informing staff the hiring halt will last until December 2021, with pay raises and promotions to be stopped until further notice.

UOB shares fell as much as 1.4% on the IG platform following the reports.

Bloomberg Intelligence senior analyst Diksha Gera said the bank looks set to reduce operating expenses aggressively to support earnings as it battles Covid-19 headwinds in key markets.

‘Personnel costs are the largest cost component, comprising 61% of operating expenses in 2019,’ she wrote on Tuesday 15 September 2020, adding that UOB's cost-to-income ratio was 44.6% in 2019, and ‘weaker revenue could put upward pressure on this ratio’.

Gera further noted that the latest HR measures could also be a prelude to more dividend cuts this year, as the lender could see over 30% profit contraction due to continued economic headwinds in key markets.

UOB's higher exposure to small businesses in Singapore also raises its vulnerability against peers DBS and OCBC, she said.

The stock has a majority rating of ‘hold’ and 12-month average target price of S$21.87 from 18 analysts polled by Bloomberg, as of Wednesday 16 September 2020.

IG’s client analysis shows that 96% of opened accounts currently hold ‘long’ (buy) positions on UOB, indicating an expectation for share price to increase.

Ready to trade UOB shares?

CFDs allow you to buy (long) and sell (short) UOB shares without trading the underlying asset. Open a live or demo account with IG today.

USD to SGD in decline for a third straight day

The USD/SGD forex pair continues to decline, and is down roughly three pips (or 0.3%) on Wednesday 16 September 2020.

The pair is trading at 1.35790 as at 16:20 SGT.

The US Dollar Index is experiencing a dip on the back of improved investor sentiment ahead of the US Federal Reserve meeting later today – its last before the US Presidential Election.

The general expectation is for the Fed to maintain its dovish monetary policy stance and interest rate at near zero.

On the other hand, the market optimism helped to buoy Asian stocks on Wednesday morning, with Hong Kong’s Hang Seng Index, Japan’s Topix index and Australia’s ASX 200 up 0.4%, 0.1% and 0.7% respectively.

The Singapore dollar was not the only Asian currency to strengthen against the greenback on Wednesday, as evident by the Asian Dollar Index’s 0.28% rally. Gainers included the CNY (+0.4%), Korean Won (+0.4%), Thai Baht (+0.4%) and Malaysian Ringgit (+0.3%), although the Indonesian Rupiah fell 0.2%.

The USD has been facing weakness for most of this week, and is down roughly 0.8% since Monday 14 September 2020.

UOB forex analysts wrote that while they have been expecting the US dollar to trade upward towards 1.3770 since last week, the breach of their ‘strong support’ level at 1.3630 yesterday (low of 1.3628) indicates that their view is ‘wrong’.

‘The outlook for USD is neutral from here and it could consolidate and trade between 1.3560 and 1.3720 for a period of time,’ the analysts concluded.

How to trade forex and stocks with IG

Are you feeling bullish or bearish on the asset classes (forex, shares) mentioned above?

Either way you can buy (long) or sell (short) the assets using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <United Overseas Bank> or <USD/SGD> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.