The Straits Times Index (STI) has fallen approximately 211 points, or 6.6% since August. OCBC is the second worst laggard among the STI’s constituents this month, accounting for 10% of the index’s decline. DBS ranks fourth, contributing to 8% of the fall. Together, OCBC and DBS contributed to approximately 18.4% of the retracement.

DBS Technical Indicator
DBS was trading near its 200 day moving average price of $15.67 yesterday. The stock gapped down to open at $15.90 on poor performance in the overnight US markets on Monday, and traded to a low of $15.81 shortly before closing at $15.85 for the day.

Its closing price of $15.85 is DBS’S lowest finish since 9 July this year. It also takes its month-to-date loss to more than 8%, despite better than expected earnings and a much cheered exit from the Bank Danamon takeover at the start of the month.

DBS gained approximately 5% after it announced that the Danamon deal was off the table, bringing the stock to its 3 month high of $17.56 on 2 Aug.

OCBC Technical Indicator

OCBC’s RSI was at 30 yesterday, approaching 20, a technical level which suggest that the stock may be oversold. Over the past 5 trading days, the stock has also been trading below its 50-day moving average price of $10.28.

OCBC is currently trading near its lowest level since 8 July. Like DBS, the stock is also down since its earnings announcement at the start of the month. OCBC’s results however, had missed analysts’ estimates.
 
Investors who are keen on DBS as well as OCBC during this volatile movement may consider the new warrants that Macquarie is listing today. Those who believe that the stock may rebound can consider buying into the calls while investors who remain bearish on the two banks can consider buying into the puts which will gain as the stocks fall.

Source: Macquarie Research - 29 Aug 2013