OCBC share price (SGX: O39) in trouble
Lifetime Membership In banks, things move at the speed of light. Within the span of just one week, three large US banks had failed – Silicon Valley Bank, Silvergate and Signature Bank. The collapses ignited global fear of contagion in the financial sector, leading to another massive financial crisis not seen since 2008. The fear is not unfound as Credit Suisse got rescued by Swiss National Bank with a US$54 billion loan while a consortium of US banks loaned First Republic a whopping US$30 billion to prevent a contagion from spreading in US. Against this backdrop, what is the implication for OCBC share price?
The narrative for OCBC share price had certainly turned scary in 2023. When I invested in OCBC in August 2021, my thesis was that bank stocks should perform well in high inflationary environment as high interest rates generally lead to higher net interest incomes for the banks. Back then, I had anticipated that US Federal Reserves would hike interest rates in 2022 and that Singapore bank stocks would be the biggest beneficiary from the rate hikes. However, it seems that the series of interest rate hikes by US Federal Reserve could be tipping global economy into a financial crisis instead.Read more