OCBC share price to explode to $10.00?

Those who stay invested during crises will be duly rewarded while those who didn’t would look back and rue missing the opportunities. In this context, will OCBC share price explode to $10.00 in the coming weeks?

With Joe Biden being confirmed as the new President of United States, many investors expect a bull run in the stock market. In my view, it does not matter whether Donald Trump or Joe Biden becomes the next President because the result will only remove uncertainties for institutional players to return to the stock market. Post-election, investors should be looking at earning growth among companies. In this regard, OCBC share price could be poised for an upturn.

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3rd quarter business update could be the pivotal catalyst that sets OCBC share price on fire. The latest financial report showed that the venerable bank recorded net profit of $1.03 billion for 3QFY2020, representing 41% higher than the previous quarter. The higher net profit was driven by lower allowances.

Year-to-date, OCBC share price has fallen by 19%. Though the latest financial performance indicates that the worst may be over for the bank, it is too premature to claim that the OCBC share price is out of the woods. Going forward, the bank will continue to be impacted by ultra-low global interest rates even as Singapore emerged from the dark chapter of COVID-19.

Question now is whether OCBC share price could storm past $10.00 in the coming weeks. The last time that OCBC share price was trading above $9.00 was before Monetary Authority of Singapore (MAS) implemented a slew of measures to preserve bank’s liquidity in July 2020. Among the various measures are capping of dividends, offering of scrip dividends and restriction of shares buybacks.

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 (initial holding 1300 OCBC shares at $11.00) so my views may be biased. As of 10 November, I have added another 1500 shares at $9.33 to dollar average my investment.

OCBC share price ready to rock again?

For MAS to relax the measures, the three banks must continue to perform well for the fourth quarter. Among the measures, the one that really stings OCBC share price is the restriction on shares buybacks. In comparison to DBS and UOB, OCBC is considered the most aggressive when it comes to shares buybacks in recent years. The series of shares buybacks in March and April enabled OCBC share price to make a swift recovery from the low of $7.80, the peak of the COVID-19 impact on global stock markets. Without the shares buybacks, it is difficult for OCBC share price to stage a comeback in the coming months.

Another factor that could derail OCBC share price momentum 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.]

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Updated: November 11, 2020 — 1:11 pm

3 Comments

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  1. Hi Gerald, may I ask why did you not average down when prices were way below $11? Just being curious.

  2. Hi Lynnette,

    Last month, when the Government announced that the 3rd quarter GDP expanded by 7.9% on quarter, I was about to buy OCBC stock when I was tempted by Wilmar because of its YKA listing. It turned out to be a mistake as Wilmar share price subsequently tanked. Now, I am looking at entering in the coming weeks.

    Regards,
    Gerald
    https://sgwealthbuilder.com

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