In the month of May, all three local bank stocks suffered carnage. UOB share price suffered the worst, with correction of 16% while OCBC share price retreated 13% and DBS share price fell 15%. For OCBC and DBS, the correction was understandable because data revealed that both banks were starting to feel the chilling effect of 2018’s housing cooling measures. However, the correction for UOB share price was considered strange because financial data revealed that the bank had not been affected so far.
In fact, building and construction loans increased from $54.9 billion in March 2018 to $67.1 billion in March 2019. Housing loans increased from $66.5 billion to $68.7 billion in the same corresponding period. Singapore market still formed the lion share of its loan portfolio (51%) while China constituted only 15.9% of its loans. Based on these data, it is not right to attribute the sharp fall in UOB share price to either the property cooling measure or the on-going US-China trade dispute.
Needless to say, the big boys were the culprits behind the meltdown of UOB share price. This counter topped the most net sell list among fund institutions in May 2019, with $110 million worth of UOB shares being net sold. Apparently, big boys had been punting UOB to plunge because of its massive exposure to the property sector. But it seemed that UOB Chairman Emeritus, Wee Cho Yaw, had the last laugh.
UOB share price rose from the dead
As one of the major STI components, UOB share price is volatile because big boys like to punt this counter. Thus, it is not prudent for investors to adopt a buy and hold strategy. A better approach should be hit-and-run.
The most intriguing part was not the collapse of UOB share price in May. Rather, it was how UOB share price managed to defy gravity without any interventions from the management. Despite the surge in short-selling volumes, UOB did not carry out any shares repurchase to support UOB share price. This is in deep contrast to OCBC, which repurchased 2.7 million OCBC shares in May while the explosive meltdown of DBS share price triggered the management to launch a series of share repurchases. By 3 June 2019, 3.1 million DBS shares were acquired from the open market. The stunning shares repurchase helped to restore stability to both OCBC and DBS share prices.
Weekly short selling volumes increased steadily from 1.07 million shares in the first week of May to a peak of 3.1 million in the week of 13 May 2019. The surge in short selling activities created chaos for UOB share price. The heavy shelling caused UOB share price to slide to a low of $23.50 by 30 May.
But it seems that the big boys realized that they had [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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