9 March 2020 would be remembered as one of the darkest days in financial world as global stock markets plunged into chaos following Saudi Arabia’s oil price war against Russia. Being one of the leading lights of Straits Times Index (STI), OCBC share price was not spared from the carnage.
OCBC share price collapsed following the epic announcement of the oil fall-out, breaching the support level of $10.00. Prior to the correction, OCBC share price had been hovering between $10.50 to $11.00. As one of the largest lenders to the oil and gas companies in Singapore, the latest blow from the oil saga knocked the wind out of OCBC share price.
Question now is whether OCBC share price will fall to $7.00? The last time that OCBC was trading at $7.00 was only in 2016, the peak of the oil price slump of 2014. So the nightmare scenario of OCBC share price free falling to $7.00 could be a possibility in the coming months. This is especially so given that the latest oil price war came on the back of the unfolding coronavirus outbreak.
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).
OCBC share price faces chaotic world
With Dow Jones plunging to 2000 points, the biggest single-day drop since 2008, the operating climate had certainly turned very dark and depressing. To make matter worse, the US Federal Reserves made an emergency rate cut on 3 March 2020. An interest rate cut means that local banks will also follow suit and thereby affect their net interest margins. This latest move will likely push OCBC share price to the edge of the cliff.
The emergency interest rate cut is widely seen as a knee-jerk reaction of the US policymakers to the coronavirus outbreak. Of noteworthy, the move is an unscheduled cut right before the next Federal Open Market Committee (FOMC) in late March, in which many analysts predict another rate cut. Interest rate cut will lead to lower bank interest margin and potentially lower the profits. This is a formidable headwind for OCBC share price indeed.
Am I losing sleep over the volatility of OCBC share price? Absolutely not. Previously, I had shared that I had used my Supplementary Retirement Scheme (SRS) savings to invest in this counter. Given that SRS savings is meant for retirement needs, my strategy for OCBC share price is [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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