CLSA is currently overweighing on the banking sector in ASEAN economies. However, the Fintech sector is entirely changed in the banking sector.
According to a report by the brokerage focusing solely on banking in Singapore as well as Hong Kong, the Singapore market is the best for banks currently.
The changing landscape of banking is resulting in newer and newer opportunities for not just the banking sector but for the Fintech industry as well. It has created a supportive environment for the start-ups as well.
According to the brokerage, the best bets in the industry are DBS, OCBC. In addition to that, in Indonesia, Mandiri has also received outperform rating from the brokerage.
The number of Fintech companies in these economies is more than 600. This is the reason why the opportunities are plenty.
Moreover, increasingly more and more banks are using the IT infrastructure in order to increase their reach. That is why; the potential which is available for the start-ups is also pretty great. As the adoption of the IT infrastructure increases significantly, the business of the start-ups will also grow.
Moreover, many homegrown companies in these countries have gone global as well. As a result, the market is pretty huge for most of these companies.
Currently, in Philippines as well as Indonesia, the adoption of technology in banking is on the lower side. That is why; it is difficult for the banks to reach out to new customers. On the other hand, with the help of platforms and interface which are been provided by the Fintech start-ups, thanks will be able to reach out to those consumers easily. That is why; the banks also need the start-ups in these countries in order to expand their reach. This is a win-win situation for the start-ups as well as for the banks.
Currently, DBS is trading at a price to earning multiple of 12.7 of FY18. Similarly, OCBC is trading at a multiple of 10.6 times its earning earnings. Owing to the low valuation, the opportunity in both of these companies is pretty huge. That is why; banks as well as Fintech companies are on the radar of the Prometheus. You can and will surely provide greater returns in the future. CLSA has continued with the overweight rating owing to this very fact. As a result, many investors are also looking to invest in these banks and related Fintech companies in order to reap the returns.
