OCBC share price in for an explosive thrashing?

Will OCBC share price bomb out on 5 November 2019, which is the day it announces its third quarter financial results? In my view, investors should brace themselves for a wild ride as there are signs that point to OCBC share price breaching the critical support level of $10.00 in the coming weeks.

2019 had been such an intriguing year for OCBC share price. Despite posting good financial results for 1QFY2019 and 2QFY2019, OCBC share price tumbled after the announcement of the financial results. For example, on 10 May 2019, the bank achieved net profit of $1.23 billion for the first quarter of 2019, representing an increase of 11% to 1QFY2018. Yet in that month, OCBC share price plunged from $12.10 to a low of $11.00.

OCBC share price

Then on 2 August 2019, OCBC share price corrected from $11.40 to $10.50 on 26 August 2019. The decline was puzzling because 2QFY2019 results showed that net profit had increased by 1% to $1.22 billion from $1.21 billion reported a year ago. Although the data indicated that growth for OCBC is slowing, the bank is still making healthy level of profits. In this regard, will 3QFY2019 be the final straw that break the camel’s back?

Despite the anticipated volatility of OCBC share price in the coming weeks, investors should stay calm. This is because the management has a track record of buying back OCBC shares. For the last financial year, a whopping 15.83 million shares had been repurchased from the market. For this financial year, a total of 6.58 million shares had been repurchased. The series of shares buybacks provided much support for OCBC share price for the past few months.

In this article, I would provide my insight on the major factors that could shape OCBC share price in the coming weeks.

OCBC share price in baptism of fire

For bank stocks, confidence means everything. So even though the business fundamentals remain robust, OCBC share price will turn bearish when market sentiments turned sour. As the bellwether of the economy, the financial performance of the banks dictate the health of the economy. Thus, when it comes to assessing OCBC share price performance, it is important to be mindful of the overall macro-economic conditions.

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In 2018, United States and China embroiled in a sinister trade war with both sides inflicting damaging tariffs on imported goods. The unfolding trade war had rattled global markets and created much uncertainties in stock markets. Due to this, the lack of confidence led to OCBC share price falling from a high of $13.70 in April 2018 to the current low of $10.60. the worsening global economy resulted in US Federal Reserves cutting interest rates in September 2019 for only the second time since 2008.

The cutting of interest rates could be a tipping point for OCBC share price. This is because the [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: October 9, 2019 — 1:07 am

2 Comments

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  1. Gerald, if you said DBS could see $21 or lower, then OCBC should drop to a level of $9, given they are more or less comparable. In this sense, I would say $10 still looks quite aggressive, not an estimation based on your style of being conservative all the time. 🙂

  2. Hi Leo,

    Yes, you are right when I wrote OCBC will drop to below $10 to the $9 level. Maybe I wasn’t clear in my article. My bad.

    Regards,
    Gerald

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