OCBC Investment Research
Date of Report: 9 June 2025
Global Markets Rally as Trade Tensions Ease and Yield Opportunities Emerge: A Comprehensive Equity Outlook
Market Overview: Optimism Returns Amid US-China Trade Progress
Financial markets surged in early June 2025 as a combination of positive US economic indicators and easing US-China trade tensions drove major indices to multi-month highs. On Friday, US stocks reached their highest levels since February, with the S&P 500 breaking through the 6,000 mark, the Dow Jones Industrial Average climbing by 443 points (1.05%), and the Nasdaq Composite up 1.20%. Bond yields also rose as the latest jobs data helped ease recession fears.
Key highlights include:
- US-China trade negotiations are set to resume, with Beijing approving some rare-earth exports—a significant development for US policymakers.
- China aims to negotiate relief on US chip controls, while the US is focused on rare-earth access.
- US job growth in May moderated but still slightly exceeded forecasts, signaling continued labor market resilience despite slowing growth trends.
- The ISM Services PMI fell below the 50-breakeven level for the first time since June last year, signaling contraction and supply chain challenges due to tariffs.
- With the possible economic slowdown, markets are eyeing the Federal Reserve’s upcoming interest rate decision, with expectations of rate cuts to support continued growth.
- Government bond sales are in focus, with US\$22 billion of 30-year bonds slated for auction, as investors show a preference for shorter-term or risk assets in the current high-rate environment.
Further comments from President Trump and ongoing trade talks—especially with a US delegation extending its stay in India—are seen as potential catalysts for additional market upside this week.
European and Asian Markets: Steady Gains and New Catalysts
Europe saw continued strength, with the Stoxx Europe 600 Index rising 0.3% to a more-than-two-week high, buoyed by supportive growth, earnings, and liquidity trends. In Asia, the MSCI Asia Pacific Index was little changed, but Chinese equities are expected to be in the spotlight as new trade and economic data are released.
Key Index Performance Table
Index |
Close |
Change |
% Change |
S&P 500 |
6,000.4 |
61.1 |
1.0% |
Dow Jones |
42,762.9 |
443.1 |
1.0% |
Nasdaq Composite |
19,530.0 |
231.5 |
1.2% |
FTSE 100 |
8,837.9 |
26.9 |
0.3% |
STOXX Europe 600 |
553.6 |
1.8 |
0.3% |
Nikkei 225 |
37,741.6 |
187.1 |
0.5% |
Hang Seng Index |
23,792.5 |
-114.4 |
-0.5% |
Singapore Market Snapshot
- Straits Times Index rose 0.4% to 3,934.3, with a 52-week range of 3,198.4 to 4,005.2.
- Volume and turnover fell by 15.6% and 12.5% respectively, indicating a quieter trading day.
- Gainers outnumbered losers with a ratio of 265 to 207.
Singapore Sector Indices
Index |
Close |
Change |
% Change |
FTSE ST Financials |
1,560.1 |
4.0 |
0.3% |
FTSE ST REITs |
633.4 |
4.3 |
0.7% |
FTSE ST Real Estate |
629.9 |
4.9 |
0.8% |
FX and Commodities Performance
- USDSGD: 1.2895 (-0.3%)
- USDJPY: 144.85 (-0.9%)
- WTI Crude: USD 64.58/bbl (+1.9%)
- Brent: USD 66.47/bbl (+1.7%)
- Gold: USD 3,310.4/oz (-1.3%)
- Silver: USD 35.98/oz (+0.9%)
HK and China Strategy: Navigating a Bumpy but Promising Path
Key Developments
- US-China tensions have eased, with both sides agreeing to a 90-day tariff rollback.
- Rare earth trade has resumed and blocked visas for Chinese students have been reversed.
- The temporary tariff rollback may reduce the urgency for new Chinese stimulus measures.
Investment Outlook
- Constructive on Chinese equities due to trade de-escalation, strong 1Q25 results, low valuations, and light institutional positioning.
- Hang Seng Index targets: Base case at 25,400, bull case at 26,900, and bear case at 20,100.
- Preference for offshore Chinese equities in the near term.
Three Investment Themes
- Quality Yield Stocks: Favored due to lower rate environment and ongoing trade negotiations.
- Internet and Platform Companies: Gaming remains resilient; AI application beneficiaries are emerging.
- Policy Beneficiaries: Focus on domestic consumption and technology innovation.
The Hong Kong equity market has rebounded, with the sharp drop in HK interbank rates (HIBOR) boosting liquidity. Investors should monitor HKD movements closely, given their implications for banks, property stocks, and highly geared companies. The IPO market in Hong Kong is showing signs of revival, with over 150 active listing applications.
Latest Research Highlights: Equity Picks and Sector Insights
A selection of recent reports provides a deep dive into leading companies and strategic sector themes:
Date |
Market |
Company/Sector |
Title |
Ticker |
Rating |
Fair Value |
6 Jun 2025 |
HK/CH |
HK and China Strategy |
Silver lining in a bumpy market |
– |
– |
– |
4 Jun 2025 |
HK/CH |
China CITIC Bank |
Relatively high dividend yield |
988 HK / 601998 CH |
BUY |
HKD 7.80 / CNY 8.95 |
4 Jun 2025 |
SG |
ST Engineering Ltd |
Buoyed by positive industry sentiment |
STE SP |
HOLD |
SGD 8.54 |
29 May 2025 |
SG |
Seatrium Limited |
Staying focused on project delivery |
STM SP |
BUY |
SGD 2.76 |
29 May 2025 |
SG |
Boustead Singapore |
Resilience in the face of adversity |
BOCS SP |
BUY |
SGD 1.46 |
29 May 2025 |
SG |
CapitaLand Ascendas REIT |
Deepening its presence in Singapore |
CLAR SP |
BUY |
SGD 3.21 |
29 May 2025 |
SG |
SIA Engineering Co Ltd |
Materially positive development |
SIE SP |
BUY |
SGD 3.00 |
26 May 2025 |
SG |
SATS Ltd |
Tariff storm spells near-term turbulence |
SATS SP |
BUY |
SGD 3.73 |
26 May 2025 |
SG |
Singtel |
Stepping up on capital management |
ST SP |
BUY |
SGD 4.51 |
21 May 2025 |
SG |
City Developments Ltd |
Some encouraging signs from 1Q25 updates |
CIT SP |
BUY |
SGD 6.01 |
20 May 2025 |
CH |
China Strategy |
Risk of potential Chinese ADR delisting cannot be ignored |
– |
– |
– |
19 May 2025 |
US |
First Solar Inc |
45X domestic tax credits poised to survive |
FSLR US |
BUY |
USD 427.00 |
19 May 2025 |
SG |
NetLink NBN Trust |
Steady distribution |
NETLINK SP |
BUY |
SGD 1.01 |
19 May 2025 |
SG |
Singapore Airlines |
Another blockbuster year |
SIA SP |
HOLD |
SGD 6.80 |
16 May 2025 |
HK/US |
KE Holdings Inc |
Earnings miss due to margin compression |
2423 HK / BEKE US |
BUY |
HKD 69.15 / USD 26.60 |
16 May 2025 |
HK/US |
Alibaba Group |
E-commerce and cloud execution on track |
9988 HK / BABA US |
BUY |
HKD 160.00 / USD 164.50 |
15 May 2025 |
SG |
ComfortDelGro Corporation |
Steady growth and relatively defensive earnings |
CD SP |
BUY |
SGD 1.71 |
15 May 2025 |
HK |
Tencent Holdings |
Growth acceleration |
700 HK |
BUY |
HKD 650.00 |
STI Stocks: Detailed Company and Sector Analysis
Top 30 STI Stocks by Market Capitalization
Code |
Company |
Price (6 Jun 2025) |
Mkt Cap (US\$m) |
Beta |
Div Yield (%) |
P/E Ratio (x) |
Recommendation |
DBS SP |
DBS Group Holdings Ltd |
SGD 45.12 |
99,435 |
1.2 |
6.6 (hist), 6.8 (F1) |
11 (hist), 12 (F1), 11 (F2) |
Buy (10), Hold (9), Sell (0) |
OCBC SP |
Oversea-Chinese Banking Corp Ltd |
SGD 16.28 |
56,848 |
1.0 |
5.2 (hist), 6.0 (F1) |
10 (hist), 10 (F1), 10 (F2) |
Buy (6), Hold (10), Sell (1) |
ST SP |
Singapore Telecommunications Ltd |
SGD 3.90 |
49,984 |
0.9 |
4.8 (hist), 4.7 (F1) |
16 (hist), 23 (F1), 19 (F2) |
Buy (15), Hold (2), Sell (1) |
UOB SP |
United Overseas Bank Ltd |
SGD 35.25 |
45,589 |
1.1 |
5.1 (hist), 6.2 (F1) |
10 (hist), 10 (F1), 9 (F2) |
Buy (11), Hold (7), Sell (0) |
STE SP |
Singapore Technologies Engineering Ltd |
SGD 7.95 |
19,264 |
0.8 |
2.1 (hist), 2.3 (F1) |
35 (hist), 30 (F1), 26 (F2) |
Buy (10), Hold (4), Sell (1) |
SIA SP |
Singapore Airlines Ltd |
SGD 7.09 |
16,351 |
1.0 |
5.6 (hist), 3.9 (F1) |
8 (hist), 14 (F1), 14 (F2) |
Buy (3), Hold (6), Sell (5) |
WIL SP |
Wilmar International Ltd |
SGD 3.04 |
14,730 |
0.7 |
5.3 (hist), 5.6 (F1) |
13 (hist), 10 (F1), 9 (F2) |
Buy (5), Hold (9), Sell (0) |
JM SP |
Jardine Matheson Holdings Ltd |
USD 43.94 |
12,965 |
0.8 |
5.1 (hist), 5.2 (F1) |
– (hist), 8 (F1), 7 (F2) |
Buy (4), Hold (3), Sell (0) |
CICT SP |
CapitaLand Integrated Commercial Trust |
SGD 2.11 |
11,983 |
0.8 |
5.1 (hist), 5.2 (F1) |
16 (hist), 19 (F1), 18 (F2) |
Buy (14), Hold (3), Sell (0) |
HKL SP |
Hongkong Land Holdings Ltd |
USD 5.46 |
11,976 |
0.8 |
4.2 (hist), 4.4 (F1) |
– (hist), 18 (F1), 17 (F2) |
Buy (9), Hold (4), Sell (0) |
Sector and Company Observations
- Banks: DBS, OCBC, and UOB maintain strong dividend yields (5-6%) and low P/E ratios, signaling value and income opportunities.
- REITs: CapitaLand Ascendas REIT, Mapletree Pan Asia Commercial Trust, and Mapletree Logistics Trust offer yields above 5%, attracting yield-focused investors in a lower interest rate environment.
- Telecom and Industrials: Singtel and Singapore Technologies Engineering are highlighted for stable dividends and moderate growth prospects.
- Consumer and Property: Companies like Wilmar, Hongkong Land, and City Developments diversify the index with exposure to food, real estate, and property development.
- Defensive Picks: ComfortDelGro and NetLink NBN Trust are noted for their steady growth and reliable distributions.
Conclusion: Navigating Opportunity Amid Uncertainty
The current market environment offers a mix of renewed optimism and underlying caution. The easing of US-China trade tensions, resilient US labor data, and rising global equity markets present opportunities for investors, particularly in quality yield stocks, technology, and policy beneficiaries. Singapore’s leading companies and REITs continue to offer attractive yields and stable earnings, while the Hong Kong and China markets are poised for potential upside amid revived IPO activities and improving sentiment.
Investors should monitor central bank policy, ongoing trade negotiations, and sector-specific developments closely to capture emerging opportunities and manage risks effectively.
Published by OCBC Investment Research Private Limited