On 15 March 2020, US Federal Reserves held a second emergency meeting to slash interest rates to near zero and announced quantitative easing measures to contain the fallout from the coronavirus. The stunning move is expected to impact local bank stocks like UOB share price in the coming days.
All hell broke loose for all three local bank stocks as COVID-19 unleashed the biggest financial storm in more than a decade. As one of the Strait Times Index (STI) heavyweights, UOB share price is not spared from the bloodbath carnage. At the point of writing, UOB share price had plunged by a staggering 26% while DBS stock slipped 27% and OCBC shed 20% year-to-date.
Being the only family-owned and family-managed bank in Singapore, UOB is controlled by the Wee family. During the financial pandemic of Great Financial Crisis 2009, veteran banker Wee Cho Yaw was still at the helm. Now, his eldest son, Wee Ee Cheong is holding the fort. Will UOB share price be able to fight against the gravitational pull of the virus pandemic?
Amid the unfolding coronavirus, UOB management decided to press the panic button by launching a series of shares buyback activities. The last time UOB repurchased its shares was way back in December 2018. Within two weeks in March 2020, the bank repurchased 432,000 of its shares. Without this support, UOB share price would have corrected at a more significant level.
Question now is: has UOB share price really reached the bottom? With Price/Book value of just 0.85 and dividend yield of 5.5%, UOB share price is trading at a very attractive level. Yet the biggest worry among investors must be catching a falling knife. This concern is not invalid given the massive fear and tremendous volatility in the financial markets right now.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in UOB share before. Whether UOB share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
UOB share price roiled by turbulence
The current crisis will be a baptism of fire for Mr Wee as investors are keen to examine how UOB will navigate through this storm. For four consecutive weeks, major fund houses had been fleeing the local bank stocks. As a result, UOB share price lost ground and spiralled out of control.
For the week of 2 March 2020: UOB stock was the second highest counter with $142 million worth of UOB shares being net sold. For 24 February 2020, UOB stock suffered again as big boys net sold $58.2 million worth of shares. On 17 February 2020, the net sold amount reached $64 million while 10 February saw $36 million worth of UOB share being net sold. The data suggested that UOB share price may not see light at end of tunnel so soon.
UOB share price also collapsed following the surge in short-selling activities on this counter. Base on the data collated from SGX, the volume of short-selling had surged by more than 100% since January 2020.
|Week||Volume||Short sale value|
|2 – 6 March||2.7 million||$65 million|
|24 – 28 February||3 million||$75 million|
|17 – 21 February||1.1 million||$28 million|
|10 – 14 February||1.2 million||$30 million|
|3 – 7 February||1.9 million||$49 million|
|27 – 31 January||1.1 million||$28 million|
The abysmal UOB share price must have left investors punching the wall as it came on the back of a stellar result for full-year FY2019. In fact, this counter had been [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.]Sign up as member here!
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