Basically, the wheels came off the wagon. After charging to a record high of $37.20 on 14th February 2022, DBS Group Holdings share price crashed to Earth, falling by a whopping 19% to reach $30.20 (at the point of writing). The bearish form of DBS Group Holdings share price certainly confounded investors as many are expecting the bank to benefit from the on-going interest rate hikes. What on earth is happening to the leading light of SGX?
Truth be told, DBS Bank turned in a subpar 1st quarter performance despite the rising interest rates. Net profit dropped 10% year-on-year to reach $1.8 billion. Many investors were still bullish on DBS Group Holdings share price following the acquisition of Citibank Taiwan consumer bank in January 2022. So you can imagine investors’ disappointment when the 1st quarter business update was announced.
The culprits for the poorer financial performances in 1QFY2022 were net fee income and other non-interest income. Apparently, the weaker market sentiment affected the bank’s wealth management and investment banking. The first quarter business update did not provide a detailed breakdown on the business performance. Nonetheless, I suspect the lockdowns in China (DBS has stakes in two banks in China) and the capitulation of cryptocurrencies may have led to collateral damage to the wealth management and investment banking arms of DBS, thereby causing DBS Group Holdings share price to lose steam.
Looking back, the collapse of TerraUSD stablecoin in May coincided with the spike in short-selling volume of DBS shares. For the week of 9 May, the short-selling volume surged to a high of 5.7 million shares. The reason for the short-selling attacks is unclear to me but it is well-known that DBS is entering the cryptocurrency space in a big way when it launched the DBS Digital Exchange (DDEX). In 2021, trading value of digital assets crossed $1 billion mark.
On the other hand, DBS bank is feeling the heat arising from the mounting economic costs from the hardline zero COVID stance by the Chinese authorities. The bank’s expansive business footprint in Hong Kong, Macau, Shenzhen, Guangzhou and Dongguan is anchored by its headquarter in Shanghai, the epicenter of the current Omicron outbreak. The Chinese city has been in lockdown from March to June 2022.
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 Holdings share before. Whether DBS Group Holdings 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 Holdings share price on standby mode
The current sluggish form of DBS Group Holdings share price should not last long as the [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.]
You may sign up to become a member of SG Wealth Builder. 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
Monthly Subscription Plan
You may sign up for the monthly subscription for only $19.99 per month! You can choose to cancel the subscription after one month with no penalty.
This plan is ideal for readers who wish to try out SG Wealth Builder Membership for a limited time. Thereafter, you may choose to upgrade to Lifetime Membership for a one-off payment. Email me (firstname.lastname@example.org) to find out more about the Lifetime Membership.
Note: After payment is made, you will be prompted with registration form to create your user-id and personal password.