OCBC share price in perfect storm
Lifetime Membership The past few days had been absolutely chaotic as global stock markets tumbled over fear of recession and soaring inflation in US. Investors were bracing for US Federal Reserves to raise interest rate hikes aggressively to fight the raging inflation. Consequently, the Federal Reserves did raise interest rate – by a whopping 75 basis points, the biggest hike since 1994. Will OCBC share price rocket in the aftermath of the interest rate hike?
Conventional wisdom indicates that bank stocks should perform well in high inflationary environment as high interest rates generally lead to higher net interest incomes for the banks. This was my hypothesis when I invested in 6000 of OCBC shares in August 2021. Back then, I anticipated that US Federal Reserves would hike interest rates this year and that Singapore bank stocks would be the biggest beneficiary from the rate hikes. However, OCBC share price flatter to deceive. And I was humbled.
Till date, US Federal Reserves had raised interest rate by 150 basis points (75 basis points on 15 June, 50 basis points on 7 May and 25 basis points on 17 March). Yet, OCBC share price remained stagnant year-to-date (at the point of writing). The sluggish OCBC share price prompted me to sell when OCBC share price was trading at $12.40 in May 2022.
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