Time to pick up some OCBC shares?

Just a short write-up - I've maintained that a portfolio should be diversified to reduce risk. The old adage of eggs and only one basket holds true for me - I've been wanting to add some Bank shares to my portfolio for a while, but I always thought they were too expensive. The time to finally do so might be here.

Brexit has left a swathe of market volatility in its wake - stocks on our own SGX have not been left untouched. However, where there's volatility in the market, there is also opportunity.

So OCBC Bank's Q1 results were nothing to shout about. The banking giant reported drops in both revenue and net profit - 2% and 14%, respectively - due to lower mark-to-market income from its insurance subsidiary (Great Eastern) along with allowance for bad debt. However, dividend payments have been regular, and OCBC represents a blue-chip stock with roughly 4% yield a year.

In addition, I've mentioned previously how I believe when a company is willing to spend millions buying back its own shares, it thinks that the market has discounted the price of its shares too steeply. I've read that OCBC has been buying back shares recently, especially within the past six months. The Motley Fool cited buyback activity in the month of June, and the Straits Times reported roughly S$6.5 million spent on buybacks in December 2015.

Earlier today, OCBC shares fell to a low of $8.22 before moving back up to close at $8.34. It is a far cry from OCBC's drop to $7.xx+ earlier this year, but current volatility may provide a chance to pick some shares up at a discount. Perhaps at $8.20+? Current Book Value stands at 8.57.

Until next time.


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