Since my last coverage on Singtel share price (SGX: Z74) on 25 April 2022, the counter went through some bouts of volatility. The stock was actually on a bullish form in the earlier part of the year, surging from $2.30 in January 2022 to a high of $2.80 in May 2022. Then the series of US Fed interest rates came along to douse the bullish form of Singtel share price.
Despite the volatility, an interesting trend is beginning to form for Singtel share price. Year-to-date, the counter has increased about 12%, outperforming the Straits Times Index (STI). The encouraging form of Singtel share price is attributed to the easing of the COVID-19 restrictions since March 2022. Consequently, international visitor arrivals jumped almost 12 times year-on-year to reach 1.5 million during the first half of the year.
Singtel’s sprawling telco businesses are prone to the impact of the pandemic as a significant portion of the Group’s revenue is derived from roaming revenue from tourists. Hence, the lifting of border restrictions and easing of public health measures should benefit Singtel’s Singapore Consumer business. Furthermore, its regional associate’s businesses will also benefit from cross border travel as Southeast Asia countries start to ease borders’ restrictions too.
The recovery of Singtel share price gained much momentum in early 2022 as the Group CEO Yuen Kuan Moon continued to execute his three growth pivots for Singtel – harnessing 5G, repositioning NCS for overseas ICT expansion and unlocking value of infrastructure assets.
Nonetheless, the recovery of Singtel share price takes place at a time when US Federal Reserve takes on an aggressive rate hike strategy in a bid to tame raging inflation in US. If investors notice, the May and June rate hikes had knocked the wind out of Singtel share price. However, by the July rate hike, the counter seemed to have stabilized and found support at $2.60. In other words, the current Singtel share price may have priced in the impact of the interest rate hikes.
I have been studying Singtel share price for the past decade. With the new CEO and the recent execution of his strategic plan, I do think that the current Singtel share price is the right entry price for myself.
Looking back, the past five years had been nothing short of a series of nightmares for Singtel investors. The period from 2015 to 2016 proved to be challenging for Singtel as the telecommunication industry underwent liberalisation that saw TPG being granted a full telecommunication license. Subsequently, the entry of Mobile Virtual Network Operators (MVNO) also heightened competition among the telco players. Arising from these external factors, Singtel share price came under pressure.
But I guess the straw that really broke the camel’s back probably came in 2019 when the Indian Supreme Court fined Singtel associate Airtel a whopping $4 billion. To contain the fallout, Singtel had to set aside a staggering provision of $1.93 billion(pre-tax) for the mind-boggling penalty. Because of this, Singtel share price struggled throughout 2019. Shortly after the Airtel saga, pandemic imploded out of nowhere in 2020 and the rest is history. Against this context, what will be the outlook for Singtel share price going forward?
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 Singtel before. Whether Singtel 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.
Singtel share price emerging from dark chapter
The lowest point for Singtel share price should be on 30 October 2020 when it collapsed to a record low of $2.00. The counter did not even reach that sort of level during the Great Financial Crisis of 2008. So you can imagine the rejoice of investors when former CEO Ms Chua Sock Koong announced her departure in that month. When the current CEO took over, Singtel share price recovered to the more respectable level of $2.30 to $2.50. While Singtel share price is still far off the levels seen during pre-pandemic, there are encouraging signs that recovery is on the way.
The biggest Achilles Heel of the former CEO should 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.]
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