OCBC share price to hit $19 by end 2022?

Lifetime Membership The incredible form of OCBC share price must have left investors in surreal. Many of them must be pinching themselves if the explosive form of OCBC share price is for real. After all, OCBC share price had been lagging behind DBS and UOB for a number of years.

On 8 February 2022, OCBC share price crossed the pivotal $13 mark to hit a high of $13.13. The last time that OCBC share price was trading at the $13 bandwidth was in May 2018. Back then, the implementation of the additional property cooling measures impacted the home loan market, causing local banks to suffer collateral damage. Not surprisingly, OCBC share price got bombed out during that period.

OCBC share price

Since then, OCBC share price had not recaptured the sizzling form of 2018 until in recent days. Luckily, the new property cooling measures unleashed in December 2021 did not affect OCBC share price because the tightening of LTV limit is applicable to only HDB housing loans. The revised LTV limit does not apply to loans granted by financial institutions, for which the LTV limit remains at 75%.

Looking back, the explosive bull run of OCBC share price from 2015 to 2018 was largely due to the nine US Federal Reserve interest rate hikes. During that period, the US Federal Reserve raised the interest rate to a high of 2.5% in December 2018. Will history repeat itself for OCBC share price?

In the aftermath of the Great Financial Crisis of 2008, the US Federal Reserve had kept interest rates effectively zero until 2015. Similarly, the Fed has kept interest rates effectively zero since the start of the pandemic. Nonetheless, on 27 January 2022, the US Federal Reserves indicated that the interest rate hikes will likely take place in March. The interest rate hikes will benefit Singapore banks because of the increase in net interest incomes. For this reason, the looming interest rate hike news sent OCBC share price to the moon.

Apart from the strong catalyst from the interest rate hikes, all eyes should be on the full-year financial result, which would be released on 23 February 2022. Based on 9MFY2021 result, the net profit reached $3.885 billion. Looking at the trend of the past three quarters’ result, there is a strong possibility that 4QFY2021 may see at least $1.2 billion of profit. If so, then full-year net profit for OCBC could hit a whopping $5 billion!

The previous record net profit for OCBC was in FY2019 ($4.87 billion). Unfortunately, that result was released in February 2020, which was right smack in the initial onset of the pandemic. The ensuing chaos in the global markets caused OCBC share price to plummet to a low of $8.40 on 20 March 2020.

Before the current crisis, the first time that OCBC Bank’s reported a net profit surpassing the $4 billion mark was for full-year 2017. Consequently, OCBC share price turbocharged to hit a record high of $13.70 in April 2018. On this basis, there is a strong possibility that OCBC share price could be charging its way to $14 in the coming months.

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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 lifted by big boys

The recent revival of OCBC share price should be the work of the big boys. According to data extracted from SGX, institutional fund houses had been pouring funds into OCBC shares for the past one month.

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 five 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.

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