OCBC share price in explosive free fall

What a roller coaster ride for investors! COVID-19 pandemic crisis had ignited one of the biggest equity sell-offs in modern history as investors fled for their lives. The Straits Times Index (STI) plunged by a terrifying 17% to reach the abysmal level of 2,208, a level last seen in June 2009. Being one of the leading lights of STI, OCBC share price was not spared from the carnage.

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But what made this crisis so extra-ordinary is that it coincided with the oil slump. It is reported that OCBC, DBS and UOB collectively faced with loan exposure of $600 million to embattled oil trader, Hin Leong Trading. As a result, OCBC share price took a beating in recent days. As the double whammy crises unfold, expect plenty of volatility for OCBC share price.

Since 23 March 2020, OCBC share price had recovered from a low of $7.80 to reach the current $8.80 level. The recovery was due to improved market sentiments following the massive US’ two trillion dollar stimulus package. Nevertheless, I am hesitant to claim that OCBC share price has reached a bottom.

The current public health is unprecedented and resulted in global lockdowns. At this point of writings, at least 2 million people had been infected globally and 125,000 deaths. The figures could be much higher due to purported government cover ups and difference in testing across countries. The damage to the economy would be tremendous. Banks would be the first to hit as they are the bellwether of the economy. In view of this, investors should brace for more volatility ahead for OCBC share price.

Question now is: will this be a V-shape recovery for OCBC share price or a long winter? While Singapore government had announced fiscal stimulus of almost $60 billion to rescue the economy, it should be noted that stimulus package is not panacea for health crisis like COVID-19. Until the vaccine or cure is found, the unfolding crisis will continue to upend the entire world.

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 thrashed by big boys

The reason for the fall of OCBC share price was of course due to the big boys’ movements. In March 2019, institutional players net sold $1.94 billion. Financial services were among the top net sell sectors. Arising from this, OCBC share price was thrashed as the counter was the second highest net sell stock, with $482 million worth of shares being net sold.

OCBC share price would have suffered a worse fate if not for [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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Updated: April 17, 2020 — 3:45 am

2 Comments

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  1. on hind sight, the market outlook is optimistic while the economic reality is bleak.

  2. Hi Juan Leng,

    Indeed, nobody could have foreseen this COVID-19 pandemic and the resulting oil slump. Not sure whether this is going to be a protracted winter or just a short recession but bank stocks will surely be volatile for the coming months.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

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