Broker: OCBC Investment Research
Date of Report: 21 July 2025

Global Markets Mixed as Earnings, Central Bank Actions and Trade Tensions Dominate Sentiment

Market Overview: US, Europe, and Asia Navigate Volatility and Policy Shifts

Global equity markets ended the week on a mixed note as investors digested sector rotation, central bank policy signals, and escalating trade tensions. In the United States, the S&P 500 touched a fresh record high before ending flat, while the Dow Jones Industrial Average slipped 0.32%. The Nasdaq Composite managed a modest 0.05% gain. Gains in utilities, a traditionally defensive and high-dividend sector, offset declines in technology and energy. Industrials have outperformed, with the sector logging a remarkable 15% year-to-date gain, outpacing the overall index and highlighting investor preference for companies in aerospace, electrical equipment, machinery, and transportation.

Bond yields retreated following dovish signals from the Federal Reserve. Governor Christopher Waller reiterated support for a July rate cut, as University of Michigan data showed improving consumer inflation expectations. Short-term Treasuries led the rally, with Waller hinting at possible dissent if the Fed holds rates steady at its late-July meeting. Market participants are keenly watching upcoming second-quarter earnings, especially from tech giants Tesla and Alphabet, which could set the tone for the sector. Trade developments are also in focus ahead of the August 1 deadline for potential US tariff hikes, and political pressure on Federal Reserve Chair Jerome Powell is intensifying as President Donald Trump pushes for lower interest rates.

In Europe, the Stoxx Europe 600 Index fell 0.1% for the week. Healthcare stocks lagged, with GSK sinking 4.6% after a regulatory setback for a key drug. The European Central Bank has lowered rates from 4.00% to 2.00% since June 2024 but is expected to pause in July amid tariff uncertainty and ahead of a possible US-EU trade deal. Economists anticipate one final ECB cut to 1.75% by December, with a pause likely at the next meeting.

Asia saw political turbulence, as Japan’s ruling coalition suffered a historic defeat in upper house elections, clouding the outlook. The MSCI Asia Pacific Index posted its first weekly gain in three weeks, buoyed by TSMC. Singapore markets closed higher, with the Straits Times Index up 0.7%, while trading volumes and turnover climbed.

Singapore Market & Global Indices Snapshot

FX & Commodities:

• USDSGD: 1.2854 (flat)
• USDJPY: 148.81 (-0.2%)
• USDCNY: 7.175 (+0.1%)
• WTI Crude: \$67.34/bbl (-0.3%)
• Brent: \$69.28/bbl (-0.3%)
• Gold: \$3,349.9/oz (+0.3%)
• Silver: \$38.18/oz (+0.1%)

Boustead Singapore (BOCS SP): Positive Momentum and Value-Unlocking Catalysts

Boustead Singapore has been a standout performer, with its share price surging 19.7% since late June and over 59% year-to-date. OCBC Investment Research sees further upside, raising the fair value estimate from SGD 1.63 to SGD 2.00 and reiterating a BUY rating. The upgrade reflects:

• Raising the target P/E multiple for the Geospatial division from 8x to 10x, recognizing its “crown jewel” status and exposure to secular growth trends.
• Reducing the discount to NAV for the Real Estate division from 50% to 25%, justified by recent value-unlocking moves such as transferring fund and property management businesses to Unified Industrial (UIB) and considering a potential S-REIT injection for logistics and industrial real estate assets.

Boustead is now trading at 8.4x P/E, below its five- and ten-year historical averages of 10.3x and 11x, respectively. Key catalysts for further re-rating in 2H25 include positive developments from the ongoing strategic review and broader efforts to revitalize the Singapore equity market. The company has proposed a final and special dividend of 4 and 2 Singapore cents per share for FY25, translating to a 3.7% yield at the last close (SGD 1.64). Shares are expected to go ex-dividend on 8 August 2025, with any pullback offering an attractive entry point.

Boustead Singapore: ESG Initiatives and Corporate Governance

• Environmental Stewardship: Boustead’s eco-sustainable solutions, including heat recovery systems in energy engineering, help reduce energy demand and improve efficiency. Its subsidiary Boustead Projects holds ISO 14001:2015 certification.
• Workforce Development: The company emphasizes workplace safety, career development, and employee engagement but has room to improve gender diversity and accident frequency rates. Boustead has donated over SGD 4 million to educational and cultural causes over the past 15 years.
• Corporate Governance: Boustead maintains a robust Code of Conduct addressing anti-bribery, fair dealing, confidentiality, insider trading, and whistleblowing. A data protection committee ensures transparency and accountability.

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Conclusion: Navigating a Complex Investment Landscape

With macro uncertainty, sector rotation, and policy shifts framing the investment landscape, investors are advised to pay close attention to earnings season catalysts, central bank policy, and company-specific developments. Boustead Singapore stands out with robust momentum and value-unlocking catalysts, while the broader STI universe offers a diverse range of opportunities for yield, growth, and defensive plays. As always, due diligence and consideration of individual investment profiles remain paramount in navigating these dynamic markets.