In the last two months since the release of bank results for FY 2018, the general comments about OCBC is that its share price is lagging behind the other banks. That appears to be my observation as well, although it is difficult to quantify the difference numerically due to the daily price movement between their highs and lows. But still, we all know that there have been general upward movement in their stock prices.
OCBC price appeared to stay low for about a month before the recent climb starting in early April. Its price ascend appears to lag behind the other two banks. DBS, also started to pick up speed in early April 2019, although it has already been inching upwards very slowly, even in the month of March 2019. There seemed to be fewer comments about UOB. But if we were to plot the price chart over the last 2-3 months, it appears that UOB and OCBC have almost same price movement characteristics. By the close of the week ending on 18 April, their prices have advanced about 6% (roughly as it is difficult to quantify the percentage due to the fairly large daily price movement between the two end points). Nevertheless, we know that there have been gains since the release of their financial results. Based on the closing price on the day of results released to 18 April 2019, DBS had gained $2.20 (8.73%) from $25.20 to $27.40, UOB $1.22 (4.77%) from $25.58 to $26.80, OCBC $0.45 (3.95%) from $11.39 to $11.84.
In effect, till date, the gains in the price movements themselves are significantly higher than their coming dividend distribution. The market appeared to be a bit slow in coming to terms with the banks good results for FY 2018. However, like in many high dividend stocks, their share prices tend to fall, and perhaps even more than the dividend once the stocks go into ex-dividend if their stock prices stay persistently high before ex-dividend. Whether their share prices are going to pick up a few days after ex-dividend would depend on the on-going news (may or may not directly related to the bank) that comes out going forward. Also, due to the uneveness in the respective share price movement, perhaps we may be seeing some kind of arbitraging in selling of DBS shares and buying of OCBC shares as we get closer to their ex-dividend dates, as DBS shares prices have already moved much more compare to the others. It is unlikely, however, that OCBC stock price in percentage terms will match that of the DBS as its financial results looks more inferior. Also, potentially DBS tends to enjoy higher Net Interest Income (NII) once interest rates start to gain traction. DBS has about 30% to 35% larger deposit base compare to the other two banks.
Just my observations and thoughts about the banks stock prices.
Disclaimer – The above points are based on the writer’s opinion. They do not serve as an advice or recommendation for readers to buy into or sell out of the mentioned securities. Everyone should do his homework before he buys or sells any securities. All investments carry risks.
Brennen has been investing in the stock market for 30 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is the instructor for two online courses on InvestingNote – Value Investing: The Essential Guide and Value Investing: The Ultimate Guide. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.