UOB share price flying again

UOB Chairman Emeritus Wee Cho Yaw is certainly larger than life. At the age of 16, I had a brief encounter with him when I received a school award from the banking legend (Mr Wee is an old boy of Chung Cheng High School (Main)). Back then, he was already very well-known, and I was totally overwhelmed by his aura. Indeed, Wee Cho Yaw is synonymous with UOB, the third largest Singapore bank. For the longest time, UOB share price has been running neck-and-neck with DBS share price.

Like DBS and OCBC, UOB share price had a mixed form in 2018. But on the business fronts, it has been a fantastic year for all three banks as earnings surged as a result of interest rate hikes. In this regard, will UOB share price rock or roil the market?

Rally of UOB share price halted

Since October 2016, UOB share price went on a berserk run, surging from $18.40 to reach the incredible height of $30 in May 2018. The dazzling run of UOB share price was certainly intriguing as it occurred at a time when the banking sector was struggling with toxic loans issued to the ailing oil and gas sector. The powerful surge of UOB share price seemed so surreal for investors until the bombshell from the government.

In July 2018, investors feared the worst for UOB share price as the government announced new property cooling measures. Unlike DBS and OCBC, UOB share price is considered a major proxy for property play. This is because in his younger days, Wee Cho Yaw had meticulously built a massive property-cum-banking empire, through UOB, UOL, UIC and Haw Par Corporation.

Unexpectedly, it turned out that Wee Cho Yaw had the last laugh as UOB share price did not collapse as what many had expected. However, UOB share price did lose some steam since 2QFY2018, largely because of declining Net Interest Margin (NIM), which fell for three consecutive quarters (from 1.84% to 1.81%). Against the backdrop of rising interest rates, a declining NIM could indicate slowing growth momentum for UOB.

Since the start of 2019, UOB share price returns to form yet again, surging from $24.26 on 3 January to $26.09 on 11 January. In my view, UOB share price may continue to maintain its bullish form on the back of a recent renewal of bancassurance partnership with Prudential which paid UOB $1.15 billion over 15 years for distribution of its insurance products. Should investors cash out or keep faith with UOB management?

Romance of the Three Kingdoms

Through the decades, UOB share price had withstood the ravage of time. Although Wee Cho Yaw inherited the bank from his father, it was [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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