Are they still cheap? Or are they expensive after this rally?
Why bank share prices fell reason #1: COVID-19 created some financial impact
COVID 19 has caused much disruptions to the economy. With lock-down measures in place, businesses have to cease operations and many individuals were laid-off.
The ramifications of the pandemic were primarily liquidity issues. Businesses and individuals experienced loss in income and are unable to repay loans. This caused much stress to the banking sector as it may experience high default rate. The MAS has came up with support measures such as loan moratorium.
This will result in banks not receiving interest payment, which raised concerns.
According to an article by the Straits Times, more than 18,000 firms have taken out loans amounting to over $14.5B under schemes overseen by Enterprise Singapore (ESG) as of Sept 30.
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