OCBC Investment Research
23 July 2025

Global Market Pulse: Key Earnings, Defensive Rotations, and Top Stock Picks for 2025

Market Overview: Investors Rotate into Defensives as Tech Falters

Global equity markets ended the latest session mixed as investors shifted their focus from technology stocks to more defensive sectors. The S&P 500 and Dow Jones Industrial Average managed modest gains of 0.06% and 0.40%, respectively, fueled by strength in health care, real estate, and materials. In contrast, the Nasdaq Composite slipped 0.39%, weighed down by pressure on chip stocks. Notably, Nvidia and Meta Platforms were among the larger decliners, with sentiment dampened by reports of delays and downsizing in SoftBank and OpenAI’s ambitious \$500 billion AI project.

Despite a decent earnings season so far, the S&P 500 has not moved more than 1% in either direction for almost a month, suggesting stretched market valuations. Strong upcoming tech earnings, particularly from Alphabet and Tesla, are anticipated to be critical catalysts. Investors are keenly watching for management commentary on macroeconomic conditions, tariffs, and AI-related spending.

On the trade front, the US appears set to extend its deadline for a China deal, while Treasury Secretary Scott Bessent is scheduled to meet Chinese officials in Stockholm. President Donald Trump finalized a trade agreement with the Philippines, imposing a 19% tariff on imported goods, and a separate deal with Japan will see tariffs set at 15% alongside a \$550 billion Japanese investment into the US.

European and Asian Markets: Tariff Headwinds and Political Uncertainty

The Stoxx Europe 600 Index dipped 0.4% as technology and industrial goods suffered, offset partially by strength in media. European companies exposed to tariffs have faced significant earnings downgrades since March, while domestic-oriented stocks have seen upward revisions.

In Asia, the MSCI Asia Pacific Index slid up to 0.5%, with Japanese equities experiencing volatility amid uncertainty over Prime Minister Shigeru Ishiba’s government. Chinese coal stocks surged on rumors of government-mandated production cuts, benefiting some Australian and Japanese coal producers.

Singapore Market Snapshot

Volume fell significantly by 34.3% to 1,355.3 million, with turnover down 4.4% to 1,325.6 million. The 52-week range for the STI is 3,198.4 to 4,225.8, with 329 gainers outnumbering 232 losers.

Global Market Indices and Commodities

Research Spotlight: Company Analysis and Investment Ideas

WuXi AppTec: Strong Earnings Momentum and Upgraded Guidance

• Stock Codes: 2359 HK / 603259 CH
• Rating: BUY
• Fair Value: HKD 113.70 / CNY 111.10

WuXi AppTec’s 1H25 profit alert exceeded both market and internal expectations, forecasting total revenue to grow 20.6% year-on-year to approximately CNY20.80 billion. Net profit is projected at CNY8.6 billion, up 102% YoY, buoyed by gains from a partial sale of an associate’s shares. Adjusted non-IFRS net profit is expected to increase 44.4% YoY to around CNY6.31 billion for 1H25. This robust performance sparked a ~10% rally in both H and A shares the next trading day, with year-to-date gains of 63% and 50% respectively, far outpacing the MSCI China Index’s 23% rise.

Key drivers of this outperformance include:

• Strong 1H25 earnings and resilient demand/backlog growth, even amid geopolitical uncertainties surrounding the Biosecure Bill
• Improved margins and operational efficiency
• Enhanced investor confidence and favorable market sentiment

Management previously guided double-digit revenue growth (10-15% YoY) for FY25, targeting CNY41.5-43.0 billion in total revenue and improved adjusted non-IFRS net profit margins above last year’s 27.0%. With two consecutive quarterly beats, there is potential for further upward revisions to the FY25 outlook.

The MSCI China Healthcare Index remains the best-performing sector year-to-date, up 57%. Pharmaceuticals and biotech have led the charge, benefiting from supportive policies for innovative drugs, major license-out deals, and the sector’s defensive appeal amid tariff uncertainty. As a leading CXO player, WuXi AppTec is well-positioned for continued robust order backlog growth, attractive valuations, and improving fundamentals.

ESG Highlights for WuXi AppTec

• ESG rating upgraded, thanks to improvements in staff management, job-specific training, and employee engagement
• Voluntary staff turnover rate fell from 14.4% in 2021 to 9.3% in 2024, with a 3-year attrition rate (10.7%) below the industry average (14.8%)
• Quality assurance practices lead peers, with ISO 9001 certification and comprehensive training/testing mechanisms
• Business ethics practices are best-in-class, featuring a detailed anti-bribery policy, board-level oversight, and regular ethics audits
• Corporate governance is average globally—one-share, one-vote principle is followed, though the board is not majority independent

CapitaLand China Trust (CLCT): Broadening Access and Portfolio Recycling

• Stock Code: CLCT SP
• Rating: HOLD (Downgraded from BUY)
• Fair Value: SGD 0.765

CLCT has provided greater detail on its participation in the upcoming listing of CapitaLand Commercial C-REIT (CLCR) on the Shanghai Stock Exchange. As part of this, CLCT will divest CapitaMall Yuhuating to CLCR at a minimum floor price of CNY748 million (SGD134.9 million). An estimated SGD20.7 million (15.3% of proceeds) will be used to acquire a 5% stake in CLCR, with the remainder (after estimated SGD5.2 million in transaction costs) earmarked for debt repayment and/or potential unit buybacks.

CLCT will waive management fees on its CLCR stake to avoid double charging. Both CLCR and CLCT have access to CapitaLand Investment’s retail pipeline in China, but only CLCT holds a right of first refusal. The CLCR listing is targeted for 4Q25.

The fair value estimate for CLCT is raised to SGD0.765, reflecting a lower risk-free rate input (down 50bps to 2.25%). Despite the higher FV, the rating is downgraded to HOLD on valuation grounds. If proceeds are used solely for debt repayment, the transaction could be dilutive to distribution per unit (DPU), presenting downside risks to current forecasts. CLCT remains a beneficiary of China’s pro-growth policies, but ongoing tariff and geopolitical uncertainties cloud the sustainability of the consumer recovery.

ESG Highlights for CapitaLand China Trust

• Maintained ESG score—leads global peers in governance, with a majority independent board, expert audit committee, and robust ethics oversight
• Opportunities for improvement in human capital management and green building initiatives
• Currently offers green leases, positioning for growing demand for sustainable buildings

Latest Recommendations Round-Up

STI Stocks Sorted by Market Capitalisation (US\$m)

Conclusion: Navigating Market Volatility with Informed Picks

The current market environment demands vigilance and selectivity, with defensive strategies gaining traction amid tech volatility and geopolitical uncertainty. WuXi AppTec stands out for its robust growth, operational excellence, and ESG leadership. Meanwhile, CapitaLand China Trust offers exposure to new investment vehicles and remains a beneficiary of China’s economic rebound, albeit with near-term risks. Investors should continue to monitor macro trends, earnings quality, and sector rotation for opportunities in the evolving global landscape.