OCBC buy Barclays’ wealth units in HK and SG, USDJPY rebound after free fall

By Margaret Yang, CMC Markets
Equities – In contrast to foreign banks which are cutting headcounts in Asia, Singapore’s local banks emerged to become “deep-pocket” buyers. On 7^th Apr, Bank of Singapore (BOS) – the wholly owned private banking subsidiary of OCBC bank – has bought Barclay’s private wealth unit in Hong Kong and Singapore for a price of 1.75% of the AUM to be transferred at the end of this year, or approximately US$320 based on its current AUM.
This deal will increase BOS’s AUM by 33% to US$73.3 billion, bringing it closer to its rival DBS bank, which managed US$75 billion AUM and ranked 6^th in the Asia Pac region. OCBC’s share price rose 1% following this news, indicating that market views this acquisition positively. The deal is an important step for the bank to expand its footprint in the region and could potentially improve its long term return on equity.
Profit taking was seen in the US market, which closed 1.2% lower last night as we approach earnings reporting season. On the other hand, 10 year US treasury yields dropped to 1.7045%, getting closer to the mid-Feb level. The Euro Stoxx Index dropped 1.3%.
FX –USD/JPY fell for the 8^th consecutive day and hit as low as 107.676 before it came back to 108.9 this morning. It is believed that 105 is a critical level which will trigger the Japanese central bank to intervene in the FX market. The recent yen volatility will probably put on pressure on policy makers at the next BOJ meeting on 27-28^th Apr. EUR/USD retraced back to 1.1370, closing below 1.1400, a key resistance level.

• Immediate resistance levels: 110.00.
• Immediate support levels: 108.30, followed by 105.26.
• RSI at 28.9%, entering into the overbought zone (0-30%).

Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.