OCBC share price led to my first investment in decade

On 13 December, OCBC share price turned bullish upon the announcement of Bangkok Bank winning the bid for Bank Permata acquisition. Previously, it was reported that OCBC had mulled over the acquisition of the Indonesian bank. On the basis of the mild recovery of OCBC share price, it seems that shareholders are glad that OCBC pulled out of the deal.

Incidentally, the latest development came at a time when I opened my Supplementary Retirement Sum (SRS) and looking at investing in a blue chip to generate reasonable returns. After much consideration, I opted to invest in OCBC share. In this article, I will share my view on why I chose to enter at current OCBC share price.

OCBC share price

Strictly speaking, my last stock investment was in 2010 when I bought K1 Venture, an investment holding company of Keppel Group. Back then, the intent was not really to grow wealth but to divert a portion of my CPF monies from the Ordinary Account before HDB wiped out the monies for the settlement of my HDB flat purchase. I wanted this investment to be a buffer in case I got retrenched from my job and still need to service my housing loan. In the blink of an eye, I have upgraded to Executive Condominium and now planning for my retirement.

Before investing in OCBC share, I have thought of using my SRS monies to purchase Singapore Savings Bonds (SSB) but the latest issue offered average return over 10 years of merely 1.76%. Even though the SSB is risk free, the SSB interest rate is way too low for my liking. In this regard, I find OCBC share price appealing because the Price/Book is about 1 while the yield is about 4.4%.

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. In addition, I am vested in this counter (holding 1300 OCBC shares at $11.00).

Strategy for OCBC share price

Readers may know that I have been tracking OCBC share price in this blog for more than 5 years. I had also mentioned that bank stocks are very volatile and therefore not ideal to hold for the long term. My stance has not changed but I thought that by taking a small position of only 1300 shares, the risk is greatly mitigated. Losing this amount of money is not going to cause financial hardship for my family. Furthermore, as a financial blogger, I thought it is important to put my money in my mouth.

BullionStar

For purpose of clarity, I thought it is important to pen down my thought process on choosing OCBC share to park my investment fund. In doing so, I can then look back and check if my investment thesis had been flawed.

If investors look back, there were two point of references for OCBC share price. The stock plunged during the Great Financial Crisis to reach an abysmal low of $4.00 in 2009 but recovered swiftly. The next major correction occurred in January 2016, when OCBC share price crashed to $7.70. That was the period when local banks were roiled by the exposure to oil and gas companies. Incidentally, 2016-2017 was also the period when OCBC built up its wealth management arm. Notable acquisitions included Barclays PLC in Singapore and Hong Kong and National Australia Bank’s Private Wealth.

The acquisitions, coupled with the US Federal Reserves interest rate hikes in 2018, helped to turbo-charged OCBC share price to a record high of $13.70 in April 2018. While I do not expect OCBC share price to return to the $13.00 level, I feel $11.00 is 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.]

Lost your Password?

Not a member yet? You may sign up to become a member of SG Wealth Builder. The full benefits and privileges of SG Wealth Builder Membership:

  1. Access to the latest premium articles of SG Wealth Builder
  2. Email notifications of latest blog articles
  3. Participate in SG Wealth Builder campaigns
  4. Request for coverage on stocks, insurance and other personal financial topics
  5. Comment in articles and Wealth Forum

SG Wealth Builder Membership

You may sign up for the SG Wealth Builder Membership for only $15 per month. As a member, you can access all the articles, including the premium ones.

Note: After payment is made, you will be prompted with registration form to create your user-id and personal password.

 

Updated: August 13, 2020 — 10:22 pm

Leave a Reply