Shares of iFAST Corporation Ltd (SGX: AIY) soared 25% in two days, rising from S$1.16 to S$1.45.
iFAST runs a financial technology platform for the buying and selling of securities such as unit trusts, bonds and equities.
As of 31 March 2020, the group’s assets under administration (AUA) stood at S$9.54 billion, down 4.6% year on year.
iFAST confirmed on 18 June that it was one of the nine digital wholesale bank (DWB) candidates shortlisted by the Monetary Authority of Singapore (MAS) to progress to the next stage of assessment.
As a recap, MAS had invited applications for digital full banks (DFB) and DWB.
MAS will select two DFB and three DWB and award them with a licence to operate by the end of 2020.
After the first round of selections, MAS confirmed that five DFB applicants and nine DWB applicants had passed the eligibility criteria and will advance to the next stage.
Digital banks are an attempt by MAS to liberalise the banking sector to allow for more services to be offered to a wider group of individuals and corporations.
Also, on 19 June, CIMB had released an initiation report on iFAST, citing the attractiveness of its prospects and urging clients to buy its shares.
We believe these two events have resulted in the spike in the share price.
However, note that nothing has been confirmed for now as to the award of the digital bank licences.
It will still be a long and possibly tough road for iFAST as it is up against strong contenders such as Sheng Ye Capital Group (SEHK: 6069) and Ant Financial, under Jack Ma’s Alibaba Group (SEHK: 9988).
On the bright side, iFAST does have a fighting chance as it partnered with Yillion Group and Hande Group, both of which have the experience and expertise in running a digital bank in China.
Assuming the group does win the licence, it may also have to cough up a significant amount of working capital, which may affect its net profits in the short-term.
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Disclaimer: Royston Yang owns shares in iFAST Corporation Ltd.