Tuesday, July 8th, 2025

Financial Analysis Report

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

  1. Quality Yield Stocks: Favored due to lower rate environment and ongoing trade negotiations.
  2. Internet and Platform Companies: Gaming remains resilient; AI application beneficiaries are emerging.
  3. 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

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