OCBC Market Pulse: US Tech Rallies, Asia Mixed, FLT DPU Falls (May 8, 2025)

OCBC Investment Research 8 May 2025
Market Pulse: US Stocks Rise on AI Chip News, Asia Mixed Amid Trade Uncertainty, and a Closer Look at Frasers Logistics & Commercial Trust

Market Commentary: A Global Snapshot

United States Market Dynamics

US stocks concluded the day higher, primarily propelled by technology shares following reports of the Trump administration’s intentions to revoke Biden-era restrictions on AI chip exports. Federal Reserve Chair Jerome Powell offered a cautious perspective on interest rates, highlighting potential inflationary and unemployment risks stemming from tariffs. However, his comments reassured investors after the Federal Open Market Committee maintained interest rates at their current levels.
Powell affirmed the US economy’s robustness, indicating the central bank would not be pressured into hasty decisions by President Donald Trump’s trade policies. With unemployment remaining low and consumer demand stable, Fed officials have expressed comfort with holding rates steady until the economic trajectory becomes clearer.
Treasury yields saw a decline across the curve, with the 10-year benchmark rate falling by approximately three basis points to 4.27%. The stock market experienced volatility throughout the session but staged a late-day rally as chip manufacturers surged on the news regarding the potential lifting of trade restrictions. The S&P 500 closed 0.43% higher, buoyed by a more than 3% gain in Nvidia. The technology-focused Nasdaq Composite advanced by 0.27%, while the blue-chip Dow Jones Industrial Average rose 0.7%. Google acted as a significant drag on the market, initially setting a bearish tone after news surfaced that Apple was exploring AI search alternatives. Despite this, the majority of sectors finished higher, with market breadth showing seven out of 10 stocks advancing.
Investors also kept a close watch on potential progress in US-China trade relations. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer are scheduled to meet with China’s top economic official over the weekend, signaling a potential initial step towards negotiations. In the precious metals market, gold prices extended losses, pressured by a stronger US Dollar and the easing of China-US trade tensions.
Market volatility has notably subsided since the initial weeks of April. This stabilization is attributed partly to Trump’s trade concessions and a series of positive economic reports that bolster confidence in the economy, according to analysts. Friday’s jobs report, which indicated unemployment held steady at 4.2%, followed favorable readings on the services sector and inflation, all suggesting minimal recessionary signals.
The key question facing the market is the duration of this positive sentiment as Trump’s trade policies unfold. Trump has stated his unwillingness to preemptively reduce tariffs on China to facilitate more substantive trade negotiations with Beijing, which remains a potential risk. Furthermore, despite an initial boost to the tech sector and AI-related stocks from the proposed rescinding of Biden-era AI chip curbs, it is widely believed that these curbs will likely persist, possibly in an altered form designed to appease key Trump allies.

Asia Market Performance

The MSCI Asia Pacific Index relinquished an earlier gain of up to 0.7%, closing with minimal change. This reflected persistent concerns regarding trade uncertainties. Chinese shares pared earlier advances that were driven by the central bank’s stimulus measures and confirmation of trade talks with the US.

Singapore Market Statistics

Here’s a snapshot of the Singapore market performance:

	Close	Net Chg	% Chg
Straits Times Index	3,865.4	5.0	0.1%
FTSE ST Financials	1,513.5	-7.6	-0.5%
FTSE ST REITs	643.2	-0.7	-0.1%
FTSE ST Real Estate	630.3	1.0	0.2%
Vol (m)	1,249.7	72.0	6.1%
Turnover (m)	1,723.1	747.9	76.7%

The 52-week range for the Straits Times Index is 3,198.4 – 4,005.2. Market breadth showed 314 gainers versus 181 losers.

World Indices Performance

Major global indices showed mixed results:

	Close	Chg	% Chg
S&P 500	5,631.3	24.4	0.4%
DJI	41,114.0	285.0	0.7%
Nasdaq Comp	17,738.2	48.5	0.3%
FTSE 100	8,559.3	-38.1	-0.4%
STOXX Europe 600	533.5	-2.9	-0.5%
Nikkei 225	36,779.7	-51.0	-0.1%
Hang Seng Index	22,691.9	29.2	0.1%
SHSE Comp Index	3,342.7	26.6	0.8%
SZSE Comp Index	1,967.8	9.1	0.5%
SHSE SZSE CSI 300	3,831.6	23.1	0.6%
KLCI	1,549.9	13.1	0.9%
JCI	6,926.2	28.0	0.4%
SET	1,220.3	32.4	2.7%
KOSPI	2,573.8	14.0	0.5%
TWSE	20,546.5	23.9	0.1%

FX & Commodities Overview

Currency and commodity markets saw varied movements:

	Close	% Chg
USDSGD	1.2942	-0.5%
USDJPY	143.83	-1.0%
USDCNY	7.228	-0.1%
USDHKD	7.761	-0.1%
WTI Crude USD/bbl.	58.07	-1.7%
Brent USD/bbl.	61.12	-1.7%
Gold USD/oz.	3,364.5	-2.0%
Silver USD/oz.	32.46	-2.3%

Deep Dive: Frasers Logistics & Commercial Trust (FLT SP)

OCBC Investment Research recently reviewed Frasers Logistics & Commercial Trust (FLT SP), noting a lower distribution per unit (DPU) in its latest results.

Key Highlights from 1HFY25 Performance

DPU Decline: 1HFY25 (financial year ending Sep 2025) DPU decreased by 13.8% year-on-year (YoY) to 3.00 Singapore cents. This figure came in below both OCBC’s and the street’s initial expectations for FY25.
Financials: 1HFY25 revenue increased by 7.5% YoY to SGD232.3m, while net property income (NPI) rose 5.4% YoY to SGD167.4m. Net finance costs jumped significantly by 37.5% YoY to SGD39.0m. FLCT also took a smaller proportion of management fees in units (43.1%) compared to 100% in 1HFY24.
Capital Distribution: Capital distribution from divestment gains increased from SGD13.5m in 1HFY24 to SGD18.0m in 1HFY25. Despite this increase, the overall DPU fell due to other factors. The report expects capital distribution from divestment gains to ease sequentially in 2HFY25. The 1HFY25 DPU accounted for 46.4% and 47.3% of OCBC’s and the street’s initial FY25 DPU forecasts, respectively, which is considered below expectations.

Portfolio Performance

Rental Reversions: Portfolio rental reversions remained solid at 19.2% in 2QFY25. The Logistics & Industrial (L&I) portfolio achieved robust rental reversions of 33.0%, while the commercial portfolio saw slightly negative reversions of -0.3% in 2QFY25.
Commercial Portfolio Nuances: The negative commercial rental reversions were primarily driven by Singapore (-8.1%), which offset positive uplifts in the UK (+18.5%), Victoria (+10.0%), and Western Australia (+23.1%). Softer rents in Singapore were linked to backfilling space vacated by Google at Alexandra Technopark (ATP). Approximately 54% of the vacated space at ATP has been backfilled, with new tenants from industries like engineering, third-party logistics (3PLs), and transport and freight. Committed occupancy at ATP is 77.1%, though physical occupancy is currently 66.4% as signed leases commence in due course.
Occupancy Rates: Portfolio occupancy rate edged down 0.4 percentage points (ppt) quarter-on-quarter (QoQ) to 93.9%. Occupancy for the commercial portfolio fell 1.4 ppt QoQ to 84.1%, mainly due to higher vacancies at ATP. The L&I portfolio maintained a much higher occupancy rate of 99.6%.

Balance Sheet and Debt

Aggregate Leverage: The aggregate leverage ratio remained stable, decreasing marginally from 36.2% (as at 31 Dec 2024) to 36.1%.
Debt Profile: 69.7% of borrowings are fixed. The interest coverage ratio remains high at 4.5x. The cost of debt slightly decreased by 0.1 ppt QoQ to 3.0% on a trailing 3-months basis. However, this is expected to increase to the mid-3% range for FY25 due to the refinancing of previously low-cost debt.

Forecast and Valuation Adjustments

Given the lower-than-expected 1HFY25 results, OCBC Investment Research has cut its FY25 and FY26 DPU forecasts by 8.3% and 6.3% respectively. The cost of equity assumption has also been raised from 6.8% to 7.1%, aligning with the approach for other industrial S-REITs under coverage. Consequently, the fair value estimate for FLCT is lowered from SGD1.14 to SGD1.07.

ESG Updates

FLCT’s ESG rating was downgraded in June 2023, primarily due to staff management practices perceived as lagging peers. While the trust’s business ethics practices are considered ahead of most global peers, a lack of periodic ethics audits was noted. FLCT leads global peers in corporate governance, particularly concerning its board and ownership structures. Environmentally, FLCT maintained its highest 5 Star rating in the GRESB 2024 assessment for the eighth consecutive year. In Australia, its industrial portfolio holds the highest Green Star performance rating.
Recommendation: BUY

Recent OCBC Investment Research Reports

Singapore STI Stocks: Performance and Recommendations

Below is a list of STI stocks sorted by market capitalization, along with key financial metrics and the distribution of analyst recommendations:

Code	Company	Price on 7 May 2025	Mkt Cap US\$m	Eqy Beta (x)	Div Yield (%) Hist	Div Yield (%) F1	P/E Ratio (x) Hist	P/E Ratio (x) F1	P/E Ratio (x) F2	Buy	Hold	Sell	Total	Recommendation Summary
DBS SP	DBS Group Holdings Ltd	SGD 42.76	93,868	1.2	5.2	7.0	11	11	11	10	9	0	19	Mostly Buy/Hold
OCBC SP	Oversea-Chinese Banking Corp Ltd	SGD 16.27	56,578	1.0	5.2	6.1	10	10	10	7	10	1	18	Mostly Hold/Buy
ST SP	Singapore Telecommunications Ltd	SGD 3.88	49,490	0.9	4.3	4.2	–	25	22	16	1	1	18	Strong Buy
UOB SP	United Overseas Bank Ltd	SGD 34.49	44,539	1.1	5.2	6.4	10	9	9	11	7	0	18	Mostly Buy
STE SP	Singapore Technologies Engineering Ltd	SGD 7.59	18,315	0.8	2.2	2.4	34	29	25	13	1	1	15	Strong Buy
SIA SP	Singapore Airlines Ltd	SGD 6.81	15,640	1.0	7.0	4.6	7	9	14	2	10	2	14	Mostly Hold
WIL SP	Wilmar International Ltd	SGD 3.10	14,959	0.7	5.2	5.7	13	10	9	5	8	1	14	Mostly Hold
JM SP	Jardine Matheson Holdings Ltd	USD 48.60	14,173	0.8	4.6	4.7	–	9	8	5	2	0	7	Mostly Buy
CICT SP	CapitaLand Integrated Commercial Trust	SGD 2.10	11,873	0.8	3.1	5.3	16	18	18	14	3	0	17	Strong Buy
SGX SP	Singapore Exchange Ltd	SGD 14.32	11,838	0.7	2.5	2.6	23	24	24	7	6	3	16	Mixed
HKL SP	Hongkong Land Holdings Ltd	USD 5.08	11,192	0.8	4.5	4.7	–	17	16	8	5	0	13	Mostly Buy/Hold
CLI SP	CapitaLand Investment Ltd/Singapore	SGD 2.57	9,908	1.1	4.7	4.8	27	18	17	15	0	0	15	Strong Buy
THBEV SP	Thai Beverage PCL	SGD 0.51	9,907	0.7	4.8	5.1	12	11	10	12	1	0	13	Strong Buy
KEP SP	Keppel Ltd	SGD 6.78	9,511	1.1	5.0	5.3	15	13	12	11	0	2	13	Mostly Buy
CLAR SP	CapitaLand Ascendas REIT	SGD 2.69	9,150	0.9	5.7	5.7	16	18	17	16	0	0	16	Strong Buy
SCI SP	Sembcorp Industries Ltd	SGD 6.58	9,048	0.9	3.5	3.8	12	11	10	12	0	0	12	Strong Buy
JCNC SP	Jardine Cycle & Carriage Ltd	SGD 25.79	7,879	0.7	5.6	5.3	8	8	7	0	2	3	5	Mostly Sell/Hold
GENS SP	Genting Singapore Ltd	SGD 0.74	6,865	0.7	5.4	5.6	15	14	13	10	8	0	18	Mostly Buy/Hold
YZJSGD SP	Yangzijiang Shipbuilding Holdings Ltd	SGD 2.18	6,632	0.9	5.5	4.0	7	7	6	9	0	1	10	Strong Buy
STM SP	Seatrium Ltd	SGD 2.01	5,260	1.3	0.7	1.0	44	18	12	9	0	0	9	Strong Buy
MPACT SP	Mapletree Pan Asia Commercial Trust	SGD 1.20	4,886	1.0	6.5	6.8	11	15	14	10	5	0	15	Mostly Buy/Hold
MINT SP	Mapletree Industrial Trust	SGD 2.04	4,496	0.7	6.6	6.6	17	15	15	9	5	1	15	Mostly Buy/Hold
MLT SP	Mapletree Logistics Trust	SGD 1.13	4,426	1.1	6.9	6.7	31	18	18	8	6	1	15	Mostly Buy/Hold
UOL SP	UOL Group Ltd	SGD 5.74	3,748	0.9	3.1	3.1	14	13	12	6	1	1	8	Mostly Buy
DFI SP	DFI Retail Group Holdings Ltd	USD 2.73	3,695	0.9	3.8	4.1	–	15	13	7	1	0	8	Strong Buy
FCT SP	Frasers Centrepoint Trust	SGD 2.28	3,564	0.5	5.3	5.3	20	20	21	12	4	0	16	Strong Buy
CIT SP	City Developments Ltd	SGD 4.88	3,370	0.9	1.6	2.5	23	16	12	6	5	3	14	Mixed
SATS SP	SATS Ltd	SGD 2.92	3,354	1.1	0.5	1.7	19	18	16	9	1	0	10	Strong Buy
FLT SP	Frasers Logistics & Commercial Trust	SGD 0.87	2,516	0.9	6.9	7.1	24	18	17	8	3	1	12	Mostly Buy/Hold
VMS SP	Venture Corp Ltd	SGD 10.97	2,439	1.0	6.8	6.7	13	13	13	4	6	2	12	Mostly Hold

Understanding OCBC Investment Research Ratings

OCBC Investment Research employs both short-term technical comments/recommendations and medium-term fundamental views with a 12-month investment horizon for its ratings.
Fundamental Ratings:
BUY: Indicates total expected returns (excluding dividends) exceeding 10% based on the current price. For REITs and Business Trusts, total expected returns including dividends apply. For companies with market capitalisation of S$150m and below, BUY indicates total expected returns (excluding dividends) exceeding 30%. For REITs and Business Trusts below S$150m market cap, total expected returns including dividends apply.
HOLD: Indicates total expected returns (excluding dividends) within a range of +10% and -5%. For REITs and Business Trusts, total expected returns including dividends apply. For companies with market capitalisation of S$150m and below, HOLD indicates total expected returns (excluding dividends) within a +/-30% range. For REITs and Business Trusts below S$150m market cap, total expected returns including dividends apply.
SELL: Indicates total expected returns (excluding dividends) less than -5%. For REITs and Business Trusts, total expected returns including dividends apply. For companies with market capitalisation of S$150m and below, SELL indicates total expected returns (excluding dividends) less than -30%. For REITs and Business Trusts below S$150m market cap, total expected returns including dividends apply.

Important Considerations and Disclosures

This report is provided for informational and general circulation purposes only. It should not be construed as an offer or solicitation to buy or sell securities or to engage in any specific trading strategy. While the information is compiled from sources believed to be reliable, its accuracy or completeness cannot be guaranteed. Investors should not act solely on this information without independent verification and should consider their individual investment objectives, financial situation, and needs.
The securities mentioned may not be suitable for all investors. Opinions and estimates are subject to change without notice. This report is not a substitute for personalized financial advice.
Oversea-Chinese Banking Corporation Limited (OCBC Bank), Bank of Singapore Limited (BOS), OCBC Investment Research Private Limited (OIR), OCBC Securities Private Limited (OSPL), and their related companies, directors, and employees may hold interests in the investment products or issuers discussed. They may also provide related financial services. Potential conflicts of interest may exist, though OIR and its analysts may not be aware of all such conflicts due to internal information barriers.
Projections and forward-looking statements in this report are subject to material differences in actual events or results. Past performance is not indicative of future results.