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OCBC share price to go berserk again?

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Within two months, OCBC share price fell off the cliff, dropping from almost $14 to $11.50. Such correction is healthy as OCBC share price had been on a spellbinding berserk run since 2017. Thus, investors should not be alarmed by the recent decline in OCBC share price. But at the back of investors’ mind must be whether OCBC share price will return to form with the impending Great Eastern Malaysia divestment. Does the current OCBC share price represent value for money or is it another value trap?

In relation to a query from a reader, many investors may be interested to know the fair value of OCBC share price. To be honest, answering this question is never easy for OCBC shares because the bank holds numerous non-core bank assets that are yet to be, or may even not be, divested in the near future.

Furthermore, even if a counter is trading at its fair value, it may not represent a golden opportunity for investors to buy on the dip. For retail investors, they must be wary of the movement of the short-sellers. You certainly don’t want to be caught off-guarded by the flipping of the whales. In recent months, OCBC share price had been hurt by short-selling activities.

OCBC share price

Share buybacks

Prior to the recent correction, OCBC share price had been on a bullish run on the back of a record share buybacks programme. For FY2017, a staggering 20.5 million OCBC shares had been repurchased from the open market, the highest since 2013.

The share repurchased were used to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: July 2, 2018 — 3:21 pm

4 Comments

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  1. Great read! I love it when I learn something new from the way you analyse these stocks. With the latest developments in the markets (interest rate hike plus another one looming, and trade war threatening), funds are being channeled away from stocks. Where are these funds headed, I am curious?

  2. Hi Boon Sheng,

    Thank you for your comments.

    I think with the US trade protectionism and US dollar increasing strength due to the interest rate hikes, it make sense for major funds to flow back to US shores to seek higher yields.

    Even though Singapore economy is still humming along fine, most global players may view South East Asia economy, as a whole, are less attractive.

    Bank stocks, being the bellwether of the economy, tend to be sensitive to changes in the economy and are the “frontliner stocks”. So I am not sure whether this could be the start of something. I certainly hope not because excessive short selling is never good.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  3. Hi Gerald, thanks for the reply. I guess if the big boys are shorting, they must know something that we don’t? Or could they be banking on the fact that the trade war would cause prices to drop.

  4. Hi Boon Sheng,

    I think that could be the reason. After all, the big boys must have a basis for them to launch the short-selling activities. So I think it pays to be extra cautious and not be reckless with our monies.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

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