It is the perfect storm for OCBC share price. The recent Hong Kong protests would likely to hurt its business in the former British colony (OCBC has a presence over there because of Wing Hang Bank). Singapore economic growth is slowing down to 0 to 1% for 2019 because of the global trade war. Being the economy bellwether, bank stocks are sensitive to economic condition. Thus, OCBC share price will be among the first line of stocks to be hit by a market slowdown.
OCBC share price comes under further pressure following the release of financial results which showed that its total housing loans portfolio continued to fall to $62.4 billion as compared to $65.9 billion in the same period last year.
Notwithstanding the above, OCBC announced a set of good Q2FY2019 results that saw net profits rising 1% to $1.22 billion. Net interest margin has increased to 1.79%. Also, the decline in housing loans had been offset by the huge increase in building and construction loans, which surged to $59.5 billion from $40.9 billion in last year. Despite the rosy report card, OCBC share price turned bearish and lost support at the $11.00. Current OCBC share price is $10.65.
In my view, the recent correction of OCBC share price is not unique to the bank alone. Both the share prices of DBS and UOB suffered similar meltdowns due to market sentiments over the escalating trade war between United States and China. The fear is that the trade dispute could impact trade loans and lead to global economic downturn.
In the last round of trade tariffs between the two countries, stock market had tanked and local bank stocks were not spared. Nonetheless, fear of a full scale economy downturn proved to be unfound. It seems that the trade disputes had mauled market sentiments but business fundamentals had not been disrupted, at least not yet.
The recent pull-back of OCBC share price should be attributed to its housing loan performance and the overall bearish sentiment on the economic condition. The fate of OCBC share price would have been worse if the management had not embarked on an aggressive shares buy-back in May 2019. So, what is the outlook for OCBC share price in FY2019?
OCBC share price faces destiny
The last property cooling measures were implemented in July 2018. Time flies and it has been a year since the introduction of the property curbs. Based on the OCBC latest financial results, the bank 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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