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Demolition of UOB share price left investors scratching heads

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UOB investors must be dumbfounded. Among the three local banks, DBS share price was the only counter to rise following the release of a stellar full-year 2018 financial result. On the other hand, OCBC share price self-destructed because of declining profit for Q4. But the case is rather bizarre for UOB because UOB share price actually tanked from $26 on 21 February to a low of $25 on 28 February after delivering increasing Q4 and full year 2018 profit.

Perhaps the imperious form of DBS business performance had overshadowed UOB’s. Nevertheless, UOB investors should not be disappointed by UOB share price performance because they should be heartened by UOB’s improving net interest margin of 1.82%. Return on Equity stormed to a high of 11.3% from 10.2% last year.

UOB share price

To celebrate the feat, UOB announced a final dividend of 50 cents per ordinary share, and a special dividend of 20 cents. Together with the interim dividend of 50 cents, the total dividend for the financial year ended 31 December 2018 amounts to $1.20 cents per ordinary share, an increase of 20% over last year. Inclusive of the special dividend, this represents a pay-out ratio of approximately 50%. The special dividend would help to offset the dampener from the cooling UOB share price.

As usual, the big boys had a part in the movement of UOB share price. Notwithstanding the good financial result, short sellers are apparently punishing UOB share price based on two issues. In this article, I will share my insights on the short selling activities and institution fund flows on UOB share.

Volatile UOB share price

On looking back, between the late November and December 2018, UOB share price experienced some sort of bottoming out as weekly short selling volume peaked at 2.2 million (26 – 30 November 2018), 2.7 million (3 – 7 December 2018) and 2.2 million (10 – 14 December 2018). Accordingly, UOB share price should have fallen through the support level of $23.80. However institutional fund houses intervened with net buying of $18.2 million, making UOB among the top ten net buying list for institutional funds in November 2018.

Incidentally, UOB management launched an aggressive shares buyback in the month of November and December 2018. As of 21 December 2018, 6 million UOB shares were being purchased from the market for full-year 2018, providing critical support for UOB share price.

Nonetheless, after the release of the full-year financial result, UOB share price came [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: March 1, 2019 — 12:11 am

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