DBS Group share price set for another hellish ride?

After delivering ten consecutive quarter of increasing profit, DBS Group share price should logically be in heaven right now. However, in life, things aren’t always so straightforward. Whilst the business fundamentals of the bank remained positive, the narrative for the global macro-economic conditions had turned dark. Against this backdrop, DBS Group share price hit the skid to reach the current $24.50 after smashing a record high of $30 in April 2018.

Question now is will Singapore’s DBS Group share price join Hong Kong protest? 11 November 2019 will be destiny day for DBS Group share price as the bank will announce its 3^rd quarter financial results for FY2019. Many investors are holding their breath for the release of the financial data. This is because Hong Kong market contributed the second highest profit to the Group (due to Dao Heng bank).

To illustrate how important Hong Kong market is to DBS Group share price, the net income from its Hong Kong subsidiary for 1HFY2019 was $755 million while Singapore contributed $2.24 billion. The rest of Greater China contributed only $145 million while the rest of the world provided $118 million. Assuming that the property disposal gain of $86 million in last year was excluded, the net profit actually grew 15%. Thus, Hong Kong market turned in a very strong performance prior to the protest.

In my view, investors should brace themselves for another hellish ride upon the release of 3QFY2019 results. When 1QFY2019 results were released on 30 April 2019, DBS Group share price bombed out from $28.40 to reach $24 in end of May. Then 2QFY2019 results also led DBS Group share price to crash from $26.60 to a low of $24 in end of August. For the record, in both 1Q and 2Q, DBS Group had delivered record net profits.

During the slump of DBS Group share price in May and August 2019, the management had launched a series of shares buybacks to restore sanity to the counter. As of 4 October, 3.65 million shares were re-purchased. Henceforth, if DBS Group share price were to plunge upon the announcement of 3QFY2019, I believe the management would intervene again.

DBS Group share price fighting gravity

Bank is the bellwether of the economy. Because of this, DBS Group share price is sensitive to economic condition. In fact, the share prices of the three local banks went into stall mode after Singapore government lowered its growth forecast of Singapore economy to 0 to 1%. Obviously, the escalating global trade disputes between US and China had dampened Singapore economic growth, thereby diminishing the banks’ outlook as well.

1HFY2019 saw trade asset volume decreased by $68 million as compared to last year, reflecting the business decline caused by worsening global trade disputes. As institutional banking segment forms the largest profit contributor for DBS Group, the on-going trade war is going to weigh on DBS Group share price in the next few months.

Despite the headwind, DBS Group share price managed to stay the course so far. Year-to-date, DBS Group share price is still [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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