Broker: CGS International
Date of Report: June 5, 2025

City Developments Ltd: Bullish Reversal Signals Fresh Upside as NIO Faces Margin Pressure — Key Stock Picks and Sector Insights

Market Recap: Fed Rate Cut Hopes Drive Sentiment, Sector Divergence in Focus

Financial markets are riding a wave of optimism as weaker-than-expected U.S. economic data strengthens the case for potential Federal Reserve rate cuts in 2025. Treasuries have extended their surge, with swap traders now pricing in two Fed moves before the end of the year, and the first rate reduction anticipated in October. The S&P 500 edged higher, led by health-care and communication companies, while tech performance remained mixed. Notably, the Institute for Supply Management’s index of services dropped to 49.9 in May, signaling contraction. Hiring has slowed to its weakest pace in two years, and anticipation is building ahead of the upcoming jobs report, which is expected to confirm slower payroll growth with a steady unemployment rate.

Despite pockets of uncertainty in sectors such as health care, technology, and construction, there are bright spots: retailers and financial services firms are reporting growth opportunities, even in the face of tariff variability. The wide dispersion in sector outlooks calls for wise allocation strategies across portfolios.

City Developments Ltd (SGX: CIT): Technical Buy with Bullish Reversal in Play

Current Price: S\$4.99

Company Overview

City Developments Limited is a leading Singapore-based real estate company offering a comprehensive suite of services, including renting, buying, and selling of residential, commercial, and hospitality properties, as well as consulting. The company’s diverse portfolio and established market presence position it as a key player in Singapore’s real estate sector.

Technical Analysis Snapshot

• Bullish Reversal Confirmed: City Developments Ltd has broken out of its downtrend, with an inverted head and shoulders pattern signaling a robust bullish reversal.
• Flag Breakout: A bullish break above the flag formation adds further confirmation to the upside move.
• Ichimoku Strength: Prices are now trending above all Ichimoku indicators, suggesting significant upward momentum.
• MACD Crossover: The MACD and signal line have crossed over at the bottom, with a positive histogram supporting the bullish case.
• Stochastic Oscillator: Continues to rise, supporting sustained momentum.
• 23-period ROC: Strong rebound above the zero line, indicating renewed buying interest.
• Directional Movement Index: Shows strong confirmation of bullish strength.
• Volume Surge: Trading volume has risen sharply above the 20-period average, underscoring sustained bullish sentiment.

Key Takeaways for Investors

• Trade Strategy: Multiple entry points at S\$4.99, S\$4.70, and S\$4.52 with stop loss at S\$4.20.
• Upside Potential: Four target prices outlined, ranging from S\$5.60 to S\$8.00, reflect significant appreciation potential for medium-term investors.
• Risk Management: Two support levels at S\$4.65 and S\$4.33 help manage downside.

NIO Inc (HKG: 9866): Margin Pressures Mount Amid Intensifying Competition

NIO Inc, a prominent Chinese electric vehicle manufacturer, faces mounting profitability challenges due to rising operating expenses and fierce competition in the sector.

Key Financial Highlights

• Net Loss Widens: NIO’s first-quarter 2025 non-GAAP net loss increased to RMB 6.3 billion, up from RMB 4.9 billion in Q1 2024, reflecting higher operating expenditure.
• Product Pipeline Strength: The company boasts a robust lineup, including the NIO, ONVO, and Firefly brands, which could act as catalysts for future sales growth.
• Competitive Landscape: Despite a promising product pipeline, intensifying sector competition is expected to weigh on shipment growth and margins.
• Valuation Update: The broker reiterates a Hold rating with a lower discounted cash flow-based target price of HK\$30.62.

Investor Implications

• Growth vs. Profitability: While NIO’s innovation and new launches provide upside to sales, investors should be mindful of profitability headwinds from increased competition and spending.
• Hold Rating: The recommendation reflects a balanced view — appreciating NIO’s long-term potential but recognizing near-term challenges.

Sector and Market Ratings: Understanding the Broker’s Framework

Stock Ratings Distribution (Quarter Ended 31 March 2025)

With 551 companies under coverage as of March 31, 2025, these figures provide useful context for understanding broker stance and market breadth.

Regulatory and Distribution Notes

CGS International provides detailed regional disclaimers and regulatory disclosures, underlining the importance of local compliance and audience suitability. Distribution is restricted in certain jurisdictions, and investors are advised to consult professional advisers to ensure suitability and compliance with local regulations.

Conclusion: Key Takeaways for Investors

• City Developments Ltd stands out with a strong technical buy signal, multiple upside targets, and robust technical momentum, suggesting an attractive entry for bullish investors.
• NIO Inc remains a Hold as competitive headwinds and margin pressures offset its robust product pipeline and growth prospects.
• Sector divergence and evolving macroeconomic signals underscore the need for careful portfolio allocation and sector selection in the months ahead.

Investors should remain vigilant, consult professional advisers, and keep abreast of both technical and fundamental signals as the market navigates a period of macroeconomic uncertainty and sectoral shifts.