Singapore's banking sector faced renewed pressure as shares extended their declines for a second consecutive day. The downturn followed a warning from JPMorgan Chase & Co. about the impact of surging long bond yields on third-quarter earnings for Southeast Asian lenders. The news triggered significant sell-offs, with DBS Group Holdings Ltd. plummeting as much as 4.5%. Meanwhile, United Overseas Bank Ltd. and Oversea-Chinese Banking Corp. each dropped more than 4.7%. These declines made the trio the largest drags on the benchmark Straits Times Index, which underperformed all other Asian markets.
The warning from JPMorgan highlighted the sensitivity of Singapore's banking sector to rising bond yields. Higher yields typically reduce the value of fixed-income securities held by banks, potentially squeezing profit margins. The impact on third-quarter earnings is expected to be particularly acute for lenders with large bond portfolios. Analysts have expressed concern that the trend could persist, further pressuring bank stocks in the region.