Since my last coverage on 28 March 2018, OUE share price had a devastating spell of run. Share price nose-dived from $1.80 to a shocking low of $1.37. After being walloped left, right, centre, OUE share is currently trading at a stunning 14-year low. Even during the dark days of The Great Financial Crisis, OUE share price had never crashed to such abysmal level. What could have happened?
A quick look at OUE shares revealed that the average 3-month volume stood at a mere 0.33mm. This means that OUE shares are thinly traded and may present some form of liquidity for long-term investors. In addition, despite having a market capitalization of $1.23 billion, this counter is seldom heavily shorted over the past three months. This means that even the big boys cannot be bothered with this real estate giant. Is OUE a value trap for retail investors?
Troubles come in troops
In all respect, 2018 has proven to be a mighty difficult year for most real estate developers in Singapore. The increase of Additional Buyer Stamp Duty (ABSD) to 12% and the tightening of loan limits had dampened demand for investment properties. Of course, the unexpected cooling measures knocked the wind out of many listed property developers’ share price. And OUE share price was not spared.
Then on 17 October 2018, URA announced the revised guideline to cap the maximum number of units for new private properties outside the central area from early next year. The move is aimed at curbing the growth of shoebox units but many analysts expect this latest move to bring down private properties prices. Following the release of this announcement, OUE share price never looked back and continue sliding from $1.45 to $1.37.
Beside the housing policies, OUE is also grappling with the supply glut of office space in the CBD. It is only in recent quarters that the rental market in this niche is showing sign of recovery.
The series of new housing policies, coupled with glut of supply of office spaces and the overall bearish market sentiments, contributed to the nightmare form of OUE share price. But the real culprit for the dismal OUE share price performance should be [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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