Lifetime Membership Crisis? What crisis?! OCBC share price rubbished all talks of crisis to stage a return of the King! Year-to-date, OCBC share price rocketed 9.5% (at the point of writing). On the basis of the current run, will OCBC hit a record high of $14 in the coming days? This will be a quick article to update readers on the outlook of OCBC share price in the next two months.
On 27 January 2022, the US Federal Reserves indicated that the interest rate hikes will likely to take place in March and confirmed its plan to end bond purchases in that month. As I have mentioned many times in this blog, the interest rate hikes will benefit Singapore banks because of the increase in net interest income. For this reason, the upcoming interest rate hike news sent OCBC share price to the moon.
The sizzling form of OCBC share price comes at a time when the bank is about to release its full year financial result for FY2021. The red-hot form of OCBC share price also coincided with the recovery of Singapore’ economy, which grew 7.2% in 2021. Talk about being at the right time and right place!
Admittedly, the recent phishing scams had rocked market sentiments to a certain extent. Arising from this, OCBC share price had been sluggish for the past two weeks. 470 victims had lost $8.5 million to the OCBC phishing scams. Nonetheless, it seems to me that the saga has come to an end as the bank offered to make goodwill payments to the victims.
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. I am vested in this counter, so my views on OCBC share price may be biased.
OCBC share price rescued by big boys
Among the three banks, OCBC was the first to resume shares buybacks (18 March 2021). Given that the shares were bought at minimum of $11.50, the bank would have spent at least $322 million on shares buybacks for the past one year. Therefore, the $8.5 million compensation to the phishing scam victims is like a drop in the ocean for OCBC. As a shareholder, I am all for the bank to pay the victims to ring-fence the toxic publicity from this incident.
Speaking about the share buybacks, they did not provide much wind to the sail for OCBC share price. A surprising weak link reported in 3rd quarter report was the decline in Net Interest Margin (NIM), which contracted 6 basis points to 1.52%. In fact, the NIM is even lower than that achieved in FY2020. As NIM is a key financial metric for the banks, I believe this could be the basis for the big boys to sell-down OCBC shares for the past few months.
Despite the aggressive share buybacks, OCBC share price continued to be sluggish. So what could have caused the recent revival of OCBC share price? According to data extracted from SGX, the big boys may have a hand in it.
While retail investors ran for their lives after news of OCBC phishing scam broke out, institutional investors took the opportunity to load up on OCBC shares. As you can see from the tables, OCBC was in the top ten institutional net buy list for three consecutive weeks in January 2022. Notably, the week of 10 January saw $140 million worth of OCBC shares being net bought by the institutional investors.
The moves by the big boys could be [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.]
For members of SG Wealth Builder logging in from Apple or Mac devices, please access through this link. This allows for one-time log in only (instead of having to key in user-id and password twice).Lifetime Membership
Congratulations on your first step to becoming part of SG Wealth Builder community! For a one-off payment of $100, you can get full access to all the articles and enjoy the benefits of SG Wealth Builder Membership.
The full benefits and privileges of SG Wealth Builder Membership:
- Access to the latest premium articles of SG Wealth Builder
- Email notifications of latest blog articles
- Request for coverage on stocks, insurance and other personal financial topics
- Comment in articles
Note: After payment is made, you will be prompted with registration form to create your user-id and personal password.