It is that “uh-oh” feeling for DBS share price all over again as the counter got bombed-out after the release of 2nd quarter earnings report. There were claims that DBS share price came under heavy shelling because the Singaporean bank missed analysts’ forecast. Should shareholders be punching the wall?
From my perspective, the notion that DBS share price fell because of missed estimates by market analysts is complete nonsense because I never believe in what the analysts said. And for sure, market analysts never have any swaying power over share prices.
So what could be the root cause for the correction in DBS share price? After all, net profit in second quarter earnings actually surged 20% to $1.37 billion, as compared to $1.14 billion last year. Under the current challenging operating environment, to be able to deliver such a mighty result is indeed impressive. So there is no basis to claim that DBS share price tanked over poor financial performance.
In my point of view, dark forces could be behind the slump in DBS share price as 2.56 million DBS shares worth $67.5 million were shorted on 2 August 2018. In terms of short sale value, this is the highest among all the SGX counter for that day. Always remember that the big whales dictate the market movement, not the analysts. This is the number one golden rule in the stock market that you must remember.
It would be a mistake for investors to merely look at business fundamentals and price trends when assessing whether to buy or sell stocks. I used to make this sort of amateur mistake when I started my investment journey. But through the years, I realize that as retail investors, you must watch out for the movements of the whales as well.
Usually the big boys got a theme to play with when they decided to strike in the market. On 1 August, there were news that US President is considering slapping 25 percent tariff on $200 billion Chinese goods. This development provided short sellers an opportunity to make quick money by shorting DBS share price.
|Period||Short sales volume||Short sale value|
|23 – 27 July 2018||1.6 million||$42.7 million|
|16- 20 July 2018||3.4 million||$87.3 million|
|9 – 13 July 2018||2.6 million||$67.7 million|
|2 – 6 July 2018||1.46 million||$37.9 million|
|25 – 29 June 2018||2.3 million||$61 million|
|18 – 22 June 2018||4.7 million||$127.8 million|
|11- 15 June 2018||3.3 million||$93 million|
|4 – 8 June 2018||2.2 million||$62 million|
|28 May – 1 June 2018||3.1 million||$90.4 million|
|21 – 25 May 2018||3.1 million||$90.1 million|
|14- 18 May 2018||2.4 million||$69.8 million|
|7 – 11 May 2018||2.8 million||$83 million|
Second quarter review
One quarter result does not define a company’s performance, so usually I do not pay too much attention on the short-term repercussions. Nevertheless, the data revealed that growth momentum is still healthy, but have slowed by 10% as compared to the previous quarter. However, it should be cautioned that the previous quarter’s result had been bolstered by a property disposal gain. This explained the explosive form of DBS share price which hit a high of $30 in April 2018.
For banks, the key data to look out for is [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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