Sometimes, reality defies logic. By right, bank stocks should have crashed with the onset of the COVID-19 pandemic and the unfolding oil crisis. But DBS, OCBC and UOB share price had been quite resilient amid the unprecedented economic challenges. Bank counters had not collapsed like what they did during the Global Financial Crisis in 2008. Perhaps the massive stimulus packages by US Federal Reserves had helped to restore market confidence. Where will UOB share price go from here?
In terms of first quarter financial results, UOB lost out to DBS but managed to beat OCBC comprehensively. Net earnings amounted to $855 million, a decline of 19% as compared to Q1FY2019. Overall, UOB’s decline was much better than DBS (-29%) and OCBC (-43%). Despite so, the outlook for UOB share price looks pretty grim as the bank navigates through the storm.
Total income for UOB remained stable at $2.41 billion even though interest rates had plummeted to abysmal levels. Non-performing loan ratio also remained stable at 1.6%. Balance sheet remained strong with CET-1 at 14.1%. By and large, it was a decent 1st quarter performance given the severity of the economic harm caused by the COVID-19 pandemic. Question now is: will it get any worse for UOB share price going forward?
At the point of writing, UOB share price was being traded at Price/Book Value of 0.83 and P/E of just 7.75%. This was indeed a very attractive level. The past few months must feel like a nightmare as UOB share price reached a low of $17.60 on 23 March 2020. The massive stimulus package unleashed by US government had restored much-needed sanity to the stock markets. Similar in Singapore, the government had announced three Budget stimulus packages aimed at cushioning the crushing impact of COVID-19 but it is too presumptuous to think that this would be a V-shape recovery.
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. Furthermore, I am not vested and have never invested in UOB share before. Whether UOB share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
UOB share price walloped
UOB share price came under heavy shelling in both March and April 2019 as financial services were among the top net sell sectors. Arising from this, UOB share price was thrashed as the counter was the second highest net sell stock in both March and April, with $344 million worth of UOB shares being net sold in March and $158.5 million worth of UOB shares being net sold in April.
UOB share price also caved in following the surge in short-selling activities on this counter. Base on the data collated from SGX, the volume of short-selling had surged by more than 100% since January 2020.
|Week||Volume||Short sale value|
|4 – 8 May||1.4 million||$28 million|
|27 April – 1 May||723000||$14 million|
|20 -24 April||1.6 million||$31.5 million|
|13 – 17 April||3.1 million||$64 million|
|6 – 10 April||1.7 million||$34 million|
|30 March – 3 April||2.4 million||$45 million|
|23- 27 March||3.97 million||$75 million|
|16 – 20 March||4.8 million||$92.5 million|
|9 – 13 March||3.7 million||$78 million|
|2 – 6 March||2.7 million||$65 million|
|24 – 28 February||3 million||$75 million|
|17 – 21 February||1.1 million||$28 million|
|10 – 14 February||1.2 million||$30 million|
|3 – 7 February||1.9 million||$49 million|
|27 – 31 January||1.1 million||$28 million|
It can be seen from the above data that the worst short-selling activities against UOB share price took place in the period 16 – 20 March 2020. This caused UOB share price to fall off the cliff. Subsequently, there was some recovery in the share price due to the feel-good factor from the US stimulus package. But the short-selling volume started to increase again in the period 1 -17 April 2020.
UOB in darkest winter
It seems that UOB will be [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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