When the market dump bank preference shares here last week, we should know that the market is in great panic mode.
Bank preference shares are considered to be one of the ‘safest fixed income deposits’ comparable to bank’s fixed deposit. How could a person just bank in $100 into a local bank account willing to settle with just getting back $94.40? And this is what happened to OCBC Cap Corp preference shares which suppose to pay 5.1% annual coupon or interest.
Despite the great rebound yesterday, the shares still languish at $96.50 in an illiquid market.
The confident level is low, not only on the particular bank, but the world banking systems now.
The immediate victim: Preference Share, get a bad name which it does not deserve. This pain may take many years to cure.
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