DBS profit up, share price down

DBS announcing another unbelieveable achievement for the 4^th quarter results. At the rate it is making profit, in no time DBS would be the biggest bank in the world and the most profitable one.  4^th quarter profit up 20%, to $1b in 3 mths. Who is saying banks cannot make big profits like the casinos? And revenue hit $10b or $10.79b in a quarter, extrapolate to one year it would be more than $40b! Earning per share also up from $1.32 to $1.57.

With this kind of scintillating performance, the management must be handsomely rewarded by the millions and well deserving. But please put in the claw back clause for safety reasons, just in case like Sembawang and Keppel. But touch wood it would not happen to DBS. DBS can expect to grow and grow and profit to go up and up like the salaries of super talents.

Now the bad news. Share price of DBS bank was down 18% for the year and this was based on yesterday’s price. Today(24 Feb) its price fell by another 26c.  What is happening, with such good results and no bad news, the share price of DBS is falling like a rock! How to explain this?

Didn’t the investors and fund managers believe in the good numbers and start to rush in to buy up more DBS shares for keeps? With 30c of dividend, it is as good as getting 30c discount. The fund managers and investors are not saying they don’t believe in the results right? And it cannot be a sell on news because the share price has been falling and not rising before the announcement. What is going on, what is happening?

DBS is not like those western banks that reported billions and billions of profits only to reveal a big black hole during the banking crisis and begged the US govt for handouts or go bust. The MAS has a very tight control and would not allow local banks to have their accounts cooked like those western banks, creating billions of profits when the truth is losing billions instead. MAS has a very high standard of control and governance and the scintillating results of DBS or any local banks are real. Don’t worry, we are in good hands.

One possible reason, the computers are doing all the damages. Computer trading is never about fundamentals. It is pure trading and gambling. The computers are programmed to trade against the investors. When investors rush in to buy, the computers will be computing when to sell and how much to sell to make profit against the investors. This could be the case. The investors and funds are rushing in to buy only to be sold down by the computers and the victims are the investors and fund managers having faith in the good results, and  the share price of DBS.

The big winners, the computer traders. And if you look at the volume of trades done, more than 10m shares in half a day, or more than $130m of trades done. This could not be the work of small investors or fund managers trading. It is the sign of computers trading and doing the damage.

DBS, Temasek and GIC and big funds are paying a heavy price to the computer traders that would show them the middle fingers as far as fundamentals are concerned. DBS is doing very well, very good company, top bank in Singapore, Batam and Bintan, oops I mean in the Asia and the world. Why is the price falling like a coconut?

Thank you, computer trading. You are a darling, very good for the market and for long term investors buying on fundamentals.