Broker: CGS International
Date of Report: July 25, 2025

Singapore Stocks in Focus: OCBC Nears Record Highs, China Aviation Oil Set for Growth

Market Recap: U.S. Labor Market Strength Keeps Fed on Hold

The global financial landscape is closely watching the robust performance of the U.S. labor market, with jobless claims falling to their lowest level since April and continuing a six-week streak of declines, the longest since 2022. This resilience is influencing Federal Reserve policy, as expectations for rate cuts are being pared back—markets now anticipate fewer than two rate reductions for the remainder of the year.

Amidst a deluge of corporate earnings, U.S. stocks remain near record highs, while 10-year Treasury yields climbed to 4.40%. The U.S. dollar wavered in response, and the S&P 500 inched up, with notable movements in Alphabet Inc. and Tesla Inc. The labor market remains a key theme for the upcoming Federal Reserve meeting, and next week’s jobs data could further calm investor nerves if current trends persist.

Additional economic data shows U.S. business activity expanding at its fastest pace this year, even as new home sales lag. On the international front, European Central Bank President Christine Lagarde indicated a “wait-and-see” approach, leaving rates unchanged for the first time in over a year. Market participants have adjusted their expectations for further ECB policy moves accordingly.

Technical Buy: Oversea-Chinese Banking Corporation Limited (OCBC)

Ticker: SIN: Oversea-Chinese Banking Corp Ltd
Last Price: S\$17.27

Company Overview:
Oversea-Chinese Banking Corporation Limited (OCBC) is a leading provider of a comprehensive suite of financial services, including deposit-taking, lending, international trade financing, investment banking, private banking, treasury, stockbroking, insurance, credit cards, cash management, asset management, and more.

Technical Analysis: OCBC on the Verge of a Breakout

• Steady Uptrend: OCBC’s share price demonstrates a strong bullish trend, forming higher highs and higher lows—classic signals of an ongoing uptrend.
• Bullish Technical Indicators:
  • Ichimoku analysis confirms bullish momentum, with the price closing above all key Ichimoku indicators, all of which are trending upward.
  • MACD (Moving Average Convergence Divergence) shows its signal line rising above zero, with a positive histogram, reinforcing bullish sentiment.
  • The Stochastic Oscillator is rising, confirming mid-term bullish momentum.
  • 23-period Rate of Change (ROC) remains positive.
  • Directional Movement Index (DMI) indicates steady bullish strength.
  • Trading volume has expanded healthily over the past 10 periods, supporting the price uptrend.

In summary, OCBC is closing in on a new all-time high, with technical signals aligning for potential upside. The stock’s bullish momentum is well-supported by both trend and volume indicators, offering a compelling case for investors seeking exposure to a robust Singaporean bank.

China Aviation Oil (CAO): A Key Beneficiary of China’s Air Travel Recovery

Ticker: SIN: China Aviation Oil

• Monopoly Advantage: CAO is uniquely positioned as the sole importer of jet fuel into China, standing to benefit directly from the ongoing recovery in Chinese air travel.
• Attractive Valuation:
  • Trading at a 2026 forecasted P/E of just 8.5x, and an ex-cash P/E of 2x, CAO is notably undervalued compared to its growth prospects.
• Recommendation: Coverage is resumed with an “Add” call and a target price of S\$1.40, rolling over valuation to FY26F and adjusting the P/E multiple from 9.5x to 10x.

CAO’s strategic position means it is set to capture the lion’s share of gains from the normalization of air travel in China, making it an attractive play for growth-oriented investors seeking exposure to the region’s aviation rebound.

Recommendation Framework and Rating Distribution

CGS International employs a clear and transparent stock rating system:

• Add: Expected total return exceeds 10% over the next 12 months.
• Hold: Expected total return between 0% and 10%.
• Reduce: Expected total return below 0%.

The total expected return combines the percentage difference between target and current price, plus forward net dividend yield. Stock price targets are based on a 12-month investment horizon.

At the end of Q2 2025, there were 561 companies under coverage.

Important Disclosures and Jurisdictional Information

CGS International emphasizes that this research is general in nature, intended for informational purposes, and does not constitute investment advice. Investors are advised to independently assess their own financial situation and consult professional advisors before making investment decisions. The report outlines specific legal and regulatory restrictions for distribution in various jurisdictions, including Australia, Canada, China, France, Germany, Hong Kong, Indonesia, Ireland, Malaysia, New Zealand, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, UAE, UK, EEA, and the United States.

CGS International, its affiliates, and analysts may have interests or positions in the securities mentioned and may offer investment banking or advisory services to the companies under coverage.

Conclusion: Singapore Equities Poised for Upside

With OCBC nearing a historic breakout and CAO strategically positioned for China’s aviation rebound, Singapore’s equities market offers robust opportunities for both momentum and value investors. Supported by strong technical trends, attractive valuations, and favorable market dynamics, these picks are worth a close look as the second half of 2025 unfolds.