LIFETIME MEMBERSHIP Will the coming financial result set DBS Group share price on fire? While OCBC share price is on a roll following three consecutive of net profit growth, things had not been so rosy at DBS Group. In third quarter, the bank announced a stunning 22% decline in net profit for 4QFY2020 on a quarter-to-quarter basis. Against this backdrop, DBS Group share price could be at an intriguing cross-road.
Unlike OCBC and UOB, DBS Bank should be viewed as a pure-play growth stock. This is because its key businesses are entrenched mainly in banking and wealth management sectors. On the other hand, OCBC and UOB are known to have substantial stakes in non-financial sectors like property development (UOL), stock brokerage (UOB Kay Hian), insurance (Great Eastern), etc. In view of this, DBS Group share price movements are highly sensitive to macro-economic conditions and also its top-line growth.
Indeed, DBS Group share price explosive surge since November 2020 was largely due to the COVID-19 vaccination, which ignited hopes of global economic recovery in 2021. Arising from this, institutional funds started to rotate out of technology stocks and poured funds into bank stocks, pushing DBS Group share price to nearly the record high of $30 (pre-COVID level). Question now is whether DBS Group share price can sustain existing bull run.
Unlike OCBC, DBS management did not carry out share buybacks since Monetary Authority of Singapore (MAS) guided local banks to cease share buybacks to preserve liquidity. Perhaps, the management did not think that DBS Group share price is undervalued. With a Price/Book Value of 1.339, DBS Group share price is at a valuation level higher than OCBC (1.064). This could be the reason why the latter is so aggressive in share buybacks lately, presumably to close the valuation gaps between the two leading banks in Singapore.
While the lack of share buybacks could be a form of handicap for DBS Group share price, I do not view this as something to be worried about for investors. Of more pertinent factors should be the interest rate movements and crude oil prices. In this article, I will share more insights on the outlook for DBS Group share price in the coming months.
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 DBS Group share before. Whether DBS Group 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.
DBS Group share price fights gravity
COVID-19 downturn turns out to be more protracted than many people have expected. In fact, it has been more than a year since the initial outbreak, yet numerous countries are still struggling with multiple waves of COVID-19 infections even with the rollout of vaccinations in many countries. In view of this, while the worst is definitely over, the recovery for global economy is likely going to be painfully slow. Therefore, by right, DBS Group share price should have peaked as the counter had factored in all the positive developments.
The recent spike in pandemic infections had led to jittery over the global recovery. Nonetheless, there are some unexpected tailwinds that turned in favor of DBS Group share price.
One of the unexpected tailwinds that helped to push up DBS Group share price was [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.]LIFETIME MEMBERSHIP
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