Broker: CGS International
Date of Report: June 9, 2025

Sembcorp Industries Surges as Bullish Momentum Returns: Key Trends in Singapore and Asian Markets

Market Overview: Renewed Optimism in Asia’s Equities

Asia’s equities are attracting renewed interest from global investors, driven by evolving government policies and improving corporate governance. South Korea, in particular, has seen a profound shift in sentiment, with international fund managers becoming increasingly bullish as the new president implements shareholder-friendly reforms. Singapore’s market, meanwhile, continues to present technical opportunities, notably with Sembcorp Industries. The report also provides a comprehensive update on NIO Inc, highlighting competitive pressures and profitability headwinds.

South Korea: Policy Reforms Ignite Stock Market Euphoria

For years, South Korea’s stock market underperformed, weighed down by governance concerns and political instability. However, the ascension of President Lee Jae-myung, who has pledged to overhaul corporate governance and nearly double market returns, has triggered a sharp shift in investor sentiment. Notable global asset managers—including Aberdeen Investments, Pictet Wealth Management, and Franklin Templeton—have increased their exposure to Korean equities. Lee’s reform agenda, reminiscent of Japan’s successful shareholder-value drive, has already pushed the Kospi Index into a bull market.

• Foreign investors are returning, boosting the Kospi Index to bull market territory.
• Government and corporate efforts are expected to strengthen trust in Korea’s capital markets and foster a culture of shareholder value.
• Early signs of change have led major funds, such as Aberdeen’s \$1.2 billion Asian ex-Japan fund, to turn overweight on Korean stocks as of May 2025.

NIO Inc (HKG): Competitive Pressures Challenge Profitability

NIO Inc., a key player in the electric vehicle (EV) sector, reported widening losses in the first quarter of 2025, reflecting the intense competition within the industry. Despite a promising product pipeline under the NIO, ONVO, and Firefly brands, operational expenses have surged, pressuring margins and profitability.

• Non-GAAP net loss for 1Q25 expanded to RMB 6.3 billion, compared to RMB 4.9 billion in 1Q24.
• Operational expenditure increased, driven by investments in product development and marketing.
• The company’s robust pipeline is expected to support sales, but shipment growth may be tempered by competitive dynamics.
• Recommendation: Hold, with a revised discounted cash flow-based target price of HK\$30.62.

Sembcorp Industries Ltd (SGX: U96): Technical Buy on Bullish Continuation

Sembcorp Industries Ltd, a leading provider of utilities and integrated industrial site services, has re-emerged as a technical buy following a strong price rebound and robust technical indicators. The company delivers power, gas, steam, water, wastewater treatment, and other on-site services to industrial parks, businesses, commercial, and residential spaces.

Technical Snapshot and Trade Recommendations

Key Technical Observations

• The uptrend channel has been strong and intact since August 2024.
• A strong bullish breakout signals a continuation of the positive trend.
• Ichimoku indicator displays three bullish golden crosses.
• MACD and signal line remain above the zero line; histogram is positive.
• Stochastic Oscillator continues to rise, indicating momentum.
• The 23-period Rate of Change (ROC) rebounded above zero.
• Directional Movement Index confirms bullish strength.
• Volume is expanding healthily, supporting the price move.

Despite being previously stopped out at S\$5.72 (as per the April 3, 2025, report), Sembcorp Industries rebounded strongly, justifying its re-addition as a technical buy.

Disclosures and Important Notices

This research report is prepared by CGS International and is intended strictly for professional and institutional investors. The company, its affiliates, and related parties may have interests in the securities mentioned. The report does not constitute an offer or solicitation to buy or sell any financial instruments and is for informational purposes only. Investors should conduct their own due diligence and consult with professional advisors before making investment decisions.

Recommendation Framework and Ratings Distribution

Coverage data as of March 31, 2025, with 551 companies under analysis.

Conclusion: Opportunities and Risks Across Asian Markets

Asian equities are re-entering the spotlight as reforms and technical signals present new opportunities. South Korea’s governance overhaul is driving a bull market, while Sembcorp Industries’ technical setup signals further upside potential for Singapore investors. Meanwhile, NIO’s story highlights the challenges of scaling profitability amid fierce EV competition. Investors should remain vigilant, conduct thorough analysis, and stay attuned to evolving market and regulatory conditions in the region.