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UOB stock to pulverise with new property cooling measures?

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Could it be the straw that broke the camel’s back? Despite the challenging operating conditions and the toxic loans from the ailing oil and gas industry, UOB stock had an enthralling fairy-tale run, surging from $17.20 in 2016 to $30 in 2018. It certainly seemed that nothing can stop the explosive form of UOB stock price, until the recent short-selling activities and property measures halted the majestic run.

Meltdown of UOB stock

6 July 2018 would be remembered as Black Friday for local bank and property stocks as Singapore government sent the market into a devastating tailspin with the announcement of additional property cooling measures. There was chaos in the stock market as bank and property stocks suffered from carnage. Among the three bank stocks, UOB stock fared the worst, plunging by as much as 3%. DBS stock retreated by 2.6% while OCBC shares fell by 2.2%.

UOB stock

On the basis of the underlying business structure, UOB stock looks set for a terrifying ride with the property cooling measures. Unlike DBS and OCBC, UOB stock is considered a major proxy for property play.

This is because in his heydays, UOB Chairman Emeritus Wee Cho Yaw had meticulously built a massive billion dollars property-cum-banking empire, through UOB, UOL, UIC and Haw Par Corporation. These businesses are famous blue chips in Singapore and help to cement a formidable investment fortress for UOB.

UOB is a major shareholder of UOL, with stake amounting to 7.13%. In turn, UIC is 50% owned by UOL. In addition, UOB Asset Management holds 9.83% in Haw Par Corporation.

But as the saying goes, what can float a boat can also sink it. UOB’s network of property businesses helped to diversify revenue and cushioned the volatility in the banking sector. But at the same time, they also expose the vulnerable bank to risks as well. This is because financing for [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 9, 2018 — 2:03 pm

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