Over 16 million UOB shares were shorted in March 2020

This is up from seven million share short sales in February on the counter of Singapore’s fifth largest listing.

With a market capitalisation of S$29.53 billion, United Overseas Bank (UOB) is the third most valuable bank in Singapore, and fifth overall among all public companies.

UOB’s share price has taken a huge beating since the coronavirus outbreak in late-January, descending as much as 34.5% during this period to a low selling price of under S$18 a share. UOB securities were trading over S$26 in January.

Stocks notably fell 8.1% in just one day on 23 March to a four-year low of S$17.28, following the US Senate’s failure to approve a US$2 trillion coronavirus fiscal response bill.

UOB’s share price has since recovered slightly. UOB equity contracts are trading at S$18.98 as at 11:33 SGT on 02 April, based on IG market data. This represents a 27% decline in share price in the first quarter of 2020.

UOB share short sell and buy-back volume jumped up in March

With equities on a downward price trend, short selling on the UOB counter hit a peak of 1.7 million shares on Thursday 19 March, or 23.2% of all transactions that day, as share price fell 5.14% to under S$19 a share – the lowest level seen since late-2016.

Over 16 million shares were shorted in March alone, as compared to only seven million in February.

Buy long or sell short on UOB shares and other Singapore bank stocks by trading CFDs and instruments via IG's market-leading platform. Start today by opening an IG account.

Like DBS Group and OCBC Bank, UOB has also been buying back shares since 06 March, although it started its buy-back programme later than the former two money lenders. Since that date, UOB has purchased 993,000 shares from the market. No asset purchases have occurred since 25 March.

Comparatively, DBS and OCBC have bought back shares totalling 21.4 million and 4.52 million respectively.

Based on a Singapore Exchange circular posted on 20 March, UOB has a lot more room to manoeuvre where it concerns buy-backs. The bank is authorised to purchase a total of 83.29 million shares under its current board mandate.

Read also: What's the latest on the share prices of DBS, OCBC and UOB?

Latest analyst predictions on UOB’s share price

Analysts from CIMB, DBS, Maybank and RHB previously gave the UOB stock an average 12-month price target of S$20.24 a share.

Maybank analysts gave the highest target of S$22.55 per share, stating that UOB has historically displayed lower non-performing loan growth volatility during banking down cycles, including the 2008 Global Financial Crisis.

They further noted that the group’s strong Common Equity Tier 1 ratio of 14.3% and high loan loss provision cover of 91% also places it in a solid position at the beginning of the coronavirus crisis.

‘The group’s regional integration efforts together with a low US dollar loan-to-deposit ratio (62%) should also give UOB an advantage in gaining market share from North-South supply chain moves’, they concluded.

DBS researchers have given the UOB stock a ‘hold’ rating, given the still-uncertain macroeconomic outlook and global recessionary pressures, as well as the recent interest rate cuts by various central banks that will only lower net interest margins.

However, RHB analyst Leng Seng Choon said UOB is his preferred pick for the Singapore banking sector because of its more conservative money lending strategy. As such, he believes UOB’s share price has the least downside risk among the three banks in the short term. He gave UOB a 12-month share price target of S$20 per share.

Buy long or sell short on UOB shares and other Singapore bank stocks by trading CFDs via IG's market-leading platform. Start today by opening an IG account.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

React to global volatility

Market volatility continues as coronavirus concerns amplify. Trade with IG and take advantage of:

  • Tight spreads – from just 1 point on major indices, and 2.8 on US crude
  • Guaranteed stops – they’re free to use, and only incur a fee when triggered
  • Round-the-clock assistance – our highly skilled team are available when you need support

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.