Just a week ago, my mum in law told me she is going to sell her loss making SIA (bought at $14) to buy OCBC. M reaction is: huh? Why?

Her answer: OCBC won’t collapse, just take dividends, her another daughter buying, because the price has fallen so much.

My reply: OCBC has fallen because market think they are paying too much for wing hang. If the deal fail, the price might rebound, but if the deal goes through, there might be further weakness, it’s like buying big -small, although interest rate rising is generally a good thing for strong local banks, but the property sector is cooling and property loans might not grow as strongly. I say there are other options if not collapsing and dividends are your only 2 considerations. If u want a kick from capital growth, then I have no comments about OCBC.

She think for (Read more...)