Broker: CGS International
Date of Report: July 16, 2025

Tencent Holdings Set for Bullish Breakout: In-Depth Technical and Market Analysis

Market Recap: Global Sentiment and Key Developments

Overnight, global markets faced mixed signals, with relatively tame US inflation data unable to fully calm Wall Street’s concerns about the effects of tariffs. While tech stocks rallied on positive news that Nvidia and AMD will resume select chip sales to China, the broader S&P 500 index reversed earlier gains. Notably, US financial stocks came under pressure as Wells Fargo trimmed its net interest income guidance, and JPMorgan Chase saw a decline despite a surprise uptick in investment banking. Citigroup’s buyback plan propelled its stock to its highest level since 2008. Treasury yields—especially for 30-year maturities—pushed above 5%, and the US dollar strengthened by 0.5%.

Despite US core inflation rising less than expected for a fifth consecutive month in June, the granular data indicated that tariff-related costs are increasingly being passed on to consumers. The likelihood of the Federal Reserve cutting rates more than once this year has diminished, with the probability of a move in September only slightly above 50%.

Singapore REITs: Mixed Outlook Amid Tariff Uncertainty

The performance outlook for Singapore REITs (SREITs) is expected to be mixed this reporting season:

• Sector DPU (Distribution Per Unit) is projected to remain relatively flat year-on-year.
• Investors should closely monitor updated debt cost guidance and assess the potential impact from global tariff hikes.
• CGS International maintains an Overweight rating on the SREIT sector, highlighting CLAR and KDCREIT as preferred picks.

Tencent Holdings Ltd (700 HK): Technical Buy with Bullish Momentum

Last Price: 517.50 HKD
CGS International maintains a bullish stance on Tencent Holdings Ltd, anticipating a strong breakout to the upside based on technical analysis and market momentum.

Key Technical Levels and Trading Strategy

Company Overview

Tencent Holdings Limited is a diversified holding company offering a broad range of services through its subsidiaries, including:

• Social networking
• Music
• Web portals
• E-commerce
• Mobile gaming
• Payment systems
• Entertainment
• Artificial intelligence
• Technology solutions

Technical Analysis: Bullish Signals Strengthen

CGS International’s technical analysis, led by analyst Chua Wei Ren, CMT, highlights several bullish indicators:

• Uptrend Channel Intact: Tencent’s stock price remains within an established uptrend channel. The recent formation of a symmetrical triangle pattern suggests potential for an upward continuation.
• Ichimoku Bullish Signal: The price has moved above the Ichimoku ‘kumo’ cloud, indicating renewed bullish sentiment.
• MACD Analysis: While the MACD histogram is currently negative and the signal line is declining, price action suggests that any downside has been corrective rather than a trend reversal.
• Stochastic Oscillator: The rising stochastic oscillator confirms renewed bullish momentum.
• Rate of Change (ROC): The 23-period ROC is positive and rising, supporting the bullish view.
• Directional Movement Index: Shows strengthening bullish trends.
• Volume: Trading volume is expanding robustly, further underpinning the bullish case.

Investment Ratings and Framework

CGS International applies a clear ratings system for stocks, sectors, and countries:

• Stock Ratings:
  • Add: Total return expected to exceed 10% over 12 months.
  • Hold: Total return between 0% and 10% over 12 months.
  • Reduce: Total return below 0% over 12 months.
• Sector Ratings:
  • Overweight: Positive absolute recommendation on a market cap-weighted basis.
  • Neutral: Neutral absolute recommendation.
  • Underweight: Negative absolute recommendation.
• Country Ratings:
  • Overweight: Investors should hold above-benchmark weight in the country.
  • Neutral: Benchmark-equivalent weight.
  • Underweight: Below-benchmark weight.

Ratings Distribution (as of June 30, 2025)

A total of 561 companies were under coverage for the quarter ended June 30, 2025.

Regional and Regulatory Disclosures

CGS International’s research is produced and distributed according to the regulations applicable in each jurisdiction where it operates, including Hong Kong, Singapore, Indonesia, Malaysia, South Korea, Thailand, and several others. The report includes extensive disclosures regarding regulatory compliance, distribution restrictions, and potential conflicts of interest across all covered markets. Investors are urged to consider their own investment objectives and seek professional advice before acting on the report’s analysis.

Conclusion: Tencent Poised for Upside, SREITs Remain Overweight

Despite global macroeconomic headwinds and persistent tariff uncertainties, CGS International identifies Tencent Holdings Ltd as a compelling technical buy with significant upside potential. Meanwhile, Singapore REITs offer selective opportunities, with a focus on careful monitoring of debt costs and tariff impacts. Investors should remain vigilant, closely track technical and fundamental signals, and consult professional advisors to align investment strategies with evolving market conditions.