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Oversea-Chinese Banking Corp. Limited Leads the Market Lower This Week


Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes – just in case they’re material to our investing thesis.

Oversea-Chinese Banking Corp. Limited (SGX: O39), or OCBC, slumped around 4% to close at S$10 for the week while the broader market, represented by the Straits Times Index (SGX: ^STI), finished almost unchanged at 3,327 points, a mere gain of 1.6 points over the previous week.

In all, nine of the 30 STI constituents ended the week in the red while five were flat. The rest closed the week with gains. The biggest winner in the index was Thai Beverage Public Company Limited (SGX: Y92) – the beer brewer had grown by 5.2% to S$0.71.

On Wednesday, OCBC and Great Eastern Holding Limited (SGX: G07) released a joint statement that they have entered into an “exclusivity agreement” with TCC Top Enterprise Limited, an investment vehicle owned by Mr. Charoen Sirivadhanabhakdi, Chairman of Thai Beverage. The agreement concerns the potential sale of the shares of United Engineers Limited (SGX: U04) that OCBC and Great Eastern owns.

Last week, there were already news reports surfacing that Mr. Sirivadhanabhakdi, Thailand’s richest man, was in talks with OCBC and Great Eastern regarding United Engineers’ shares.

Elsewhere, OSIM International Ltd. (SGX: O23) announced during the week that it will be issuing S$170 million worth of zero-coupon convertible bonds. There’s an option for the company to increase the size of the bond issue by an additional S$30 million depending on the level of investor interest.. The bonds, which are due in September 2019, can be converted into new OSIM shares at a conversion price of S$3.525 apiece. The health and wellness outfit will use the net proceeds for “potential strategic acquisitions”, among other uses. The market didn’t take well to the news as OSIM’s shares lost 5.3% for the week to close at S$2.69.

It should perhaps be noted that one of OSIM’s larger past acquisitions did not go well. In 2005, the company bought Brookstone for US$422 million but the business eventually went bust.

The STI is currently trading at 13.9 times its historical earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.