Two, pessimism is setting in just when the city's benchmark interbank borrowing rate is climbing. To the extent Singapore banks' net interest margins in recent years have been hostage to the abundance of cheap money, investors had a reason to be optimistic. Clearly, China-related jitters are trumping any hopes of them being able to turn their low-cost deposits into higher-priced loans, especially without a revival in the property market:

Three, the pecking order has changed since China's shock Aug. 11 devaluation. Before that, UOB, the smallest of the trio by market value, had the lowest price-to-book ratio. Now it has the highest. Interestingly, this shift has occurred even as analysts have marked down their estimates of UOB's 2015 per- share earnings by almost 3 percent over the past four weeks. It seems investors are giving UOB the benefit of the doubt because of its lower exposure to Asia's biggest economy:

Ultimately, though, it's impossible to accurately assess Singapore banks' actual vulnerability to a China meltdown. All three are regional lenders with significant corporate loan books at a time when companies in Asia are facing deep distress because of the way China's flagging demand for commodities has caught them off guard. Ripples in the high-yield bond market are giving a strong signal that 2016 may well turn out to be a year of accelerated loan-loss provisions for them. Investors may be right to seek cover.

Eoin Treacy's view

Singapore has benefitted enormously from its status as a private banking centre over the last decade. The rise of China, India and wider ASEAN has created plenty of demand for the strong governance and professionalism to be found in the city state. That’s worth remembering as the banking sector is buffeted by currency market volatility, China’s slowdown, the commodity bear market and rising interest rates.

The Singapore Financials Index (P/E 9.59, DY 5%) has already priced in a lot of this bad news. A short-term oversold condition is evident and with a short covering rally gaining impetus in global markets there is potential for some steadying.

The US Dollar’s uptrend against the Singapore Dollar has at least paused but a sustained move below the trend mean would be required to question medium-term scope for additional upside.   

Following my last visit to Singapore less than a year ago I was struck by how much prices for just about everything had increased. Mrs Treacy and I are very fond of Singapore’s pepper crab and chilli crab delicacies but while the quality is beyond question the cost has risen considerably. For a culture which is in many ways focused around the dinner table that is not an insignificant observation. The property market has now peaked and that probably represents the greatest impediment to a swift recovery by the banking sector.