Story of the day
Oil prices are spiking as the US-Russia standoff over Ukraine escalates. Brent crude oil prices have crossed USD90/bbl as the geopolitical risk premium makes a strong comeback.
Has #ideas2invest been useful to you?
Please click here to share your feedback.
Watch video here
What does this mean for your portfolio?
Share prices of oil majors continue to lag oil price performance even before the Ukraine news flow, trading below 2020 highs. They are mostly delivering profit higher than 2019 levels as well. This is especially so for Asian oil stocks, thus presenting an attractive entry point.
Ready to act now?
Simply click on the stock or fund name below for direct access to our online trading platforms.
We like these:
Oil Proxies
Given our expectations of Brent crude oil prices at USD80/bbl in 2022 and even higher in 2023, we still remain positive on oil proxies in the medium term, with or without the current conflict-related volatility. In spite of the favourable macro backdrop, stock prices continue to be significantly below 2020 highs, especially that of CNOOC, and have not fairly reflected the strong oil rebound.
CNOOC is currently trading at -1SD below mean at 0.8x PB, which we believe presents an attractive entry point for investors. This is in view of the positive catalysts in place: (1) Favourable production outlook in 2022 backed by healthy realised oil prices, (2) special dividend for FY21 and lucrative dividend yield of 10-11% in the next three years, and (3) an A-Share listing. A share buyback exercise would also lend support to CNOOC’s share price.
Not a DBS client?
Open a trading account with us today.
More insights on the go:
Regional Strategy 2022: Shaken but not stirred
2-min video
This is not the start of a bear market
2-min video
Alternatives: Gold 1Q22: Shimmer and shine
5-min article