OCBC share price on the way to $11

On 9 November 2020, I wrote that OCBC share price was poised for an upturn and could potentially hit $10.00. Since then, OCBC share price went on a splendid run to smash past $10.00 within a span of just two weeks. The superb form of OCBC share price caught many investors, including myself, by surprise.

The main catalyst for OCBC share price should be attributed to the possibility of COVID-19 vaccination deployment in December, sparking widespread pent-up expectations of macroeconomic recovery in 2021. Indeed, 2020 has been such a wretched year for OCBC share price that any positive developments in the fight against COVID-19 pandemic raise expectations of a global economic recovery.

OCBC share price

Another catalyst for OCBC share price was the Lion Global Investors’ listing of tech-focused ETF on SGX. The ETF tracks technology companies listed in Hang Seng. As Lion Global Investors is the asset management arm of OCBC, the ETF should give OCBC share price a shot in the arm and fuel the bullish form of OCBC share price.

The third driving force for OCBC share price should be the stellar performance of its wealth management unit – Bank of Singapore. The acquisition of Barclay’s wealth management business in Singapore and Hong Kong in 2016, coupled with the acquisition of National Australia Bank’s wealth management business in Singapore and Hong Kong in 2017, bolstered the wealth management’s clout. Despite the challenging climate, 3rd quarter saw wealth management recording income of $938 million, the highest quarter since 2018.

Admittedly, OCBC share price has cooled off from the high of $10.40 witnessed on 25 November. Nonetheless, I view this pull-back as healthy. You certainly don’t want to see the counter surging to the point of bubble formation. If OCBC share price reached that stage, the bubble burst will be explosive. But as Singapore approaches Phase Three of the Circuit Breaker, there are concrete signs that the economy is on the path to recovery.

Given that bank stocks are proxy to the economy conditions, will it be an U-shape recovery for OCBC share price? There are concerns of a market crash as US stock market hit a record high in recent weeks. What goes up must come down for sure. If so, does the current OCBC share price represent good opportunity for entry? In this article, I will share my thoughts on the outlook for OCBC share price.

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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 2800 OCBC shares at average $10.10) so my views may be biased.

OCBC share price burst into life!

Following the announcement of the 3rd quarter business update, OCBC share price burst into life. The latest financial report showed that the 2nd largest bank in Singapore 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.

With a Price/Book Value of just 0.926, OCBC share price is widely seen as a laggard as compared to DBS stock, which is trading at Price/Book Value of 1.212. Based on the recent strong financial performance and OCBC being the strongest bank in Singapore, I think there could be further headroom for OCBC share price to rise. Based on data from SGX, it seems that the big boys [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 30, 2020 — 6:33 am

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