UOB share price exploded with Hin Leong

Troubles certainly come in troops for UOB share price. Amid the devastating fallout from COVID-19, UOB share price slipped following news that DBS, OCBC and UOB were faced with $870 million loan exposure to embattled home-grown oil trader, Hin Leong.

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The fall of Hin Leong cannot be underestimated as it is one of the largest marine fuel suppliers in Singapore. It also came at a time when global crude oil was trading at negative prices due to oversupply issue and price war between Saudi Arabia and Russia. Oil crisis is certainly not a new risk for local banks. In the 2014’s oil crisis, UOB share price got hammered as well, falling from $24 in May 2015 to the abysmal low of $17 in February 2016. But this time round, things may not be so straightforward for UOB share price.

To be honest, I have never seen such great chaos in my life. The pandemic crisis had effectively brought global economy to a complete standstill. And now with this oil crisis unfolding, the road to economic recovery will surely be long and arduous. Being the bellwether of the economy, has UOB share price seen its best days or has this counter bottomed out? In this article, I will share my insights on the two financial metrices that would shape UOB share price in the coming months.

Like many counters, it seems that UOB share price had bottomed out on 23 March 2020. The massive stimulus package unleashed by US government had restored much-needed sanity to the stock markets. Similar in Singapore, the government had announced three Budget stimulus packages aimed at cushioning the crushing impact of COVID-19. But whether these measures would turn the tide remain to be seen as it is naïve to assume that demand side of the house will return quickly after the virus had been tamed.

In March 2020, UOB management made a series of very rare shares buy backs. The last time that UOB made shares repurchases was in December 2018. By 25 March 2020, UOB repurchased 993,300 shares. The shares buybacks helped to provide support for UOB share price.

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 in key battle

We are still in the early days of the COVID-19 crisis as the circuit breaker had been extended to 1st June 2020. Needless to say, the economic impact will be severe for Singapore. As the current crisis is unprecedented, it is difficult to assess how UOB share price will be impacted in the coming weeks.

Due to the government COVID-19 relief packages, massive layoffs and downsizing have not occurred. But given that the economic demand would not return so soon, it is only a matter of time that mass retrenchments take place in Singapore. The oil crisis will only exacerbate the situation for the oil and gas sector. To put things into perspective, bankruptcies hit a record 462 in March 2020, the highest since October 2004. Against this backdrop, UOB share price is likely to [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: April 26, 2020 — 11:08 pm

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