OCBC Investment Research
25 July 2025

Singapore Equities: Market Pulse and In-Depth Stock Analysis – July 2025

Market Overview: Global Equities Tread Cautiously Amid Trade Tensions and Earnings Surprises

Global stock markets displayed mixed performance as investors balanced robust tech earnings against persistent trade risks and sectoral weakness. In the United States, the S&P 500 and Nasdaq Composite edged to fresh all-time highs, buoyed by strong demand for artificial intelligence highlighted in Alphabet’s latest results. However, these tech gains masked broader declines: eight of the S&P 500’s 11 sector indices closed lower, with consumer discretionary and materials sectors leading the fall. The Dow Jones Industrial Average, in particular, dropped 0.70% (316.38 points), weighed down by IBM’s disappointing software revenue and UnitedHealth’s slide after disclosures of a Department of Justice probe into its Medicare practices.

Trade-related uncertainty remained a key risk, particularly as talks continued between the US and several countries yet to agree on lower tariff rates. President Donald Trump’s stance of not going below a 15% tariff floor signaled a potentially higher baseline for future levies, raising the specter of a “risk-off” event if new tariffs are announced in August.

Regional Markets at a Glance

• Europe: The Stoxx Europe 600 Index gained 0.24% following strong telecom earnings (notably BT Group, up 10%), though food and beverage stocks lagged due to weak results from Nestle. European equities have remained rangebound, about 2% below their March highs, as investors await clarity on trade and growth.
• Asia: The MSCI Asia Pacific Index rose as much as 1.1%, led by cyclical sectors and tech shares following Alphabet’s upbeat revenue guidance. Japanese stocks outperformed after a US-Japan trade deal set a 15% levy on exports, pushing the Topix to an all-time high. South Korea’s SK Hynix also rallied on robust earnings and plans to expand advanced memory chip capacity.
• Singapore: The Straits Times Index (STI) climbed 1% to 4,273.1, with financials outperforming (+1.3%) while real estate and REITs saw mild declines. Market turnover was steady, with 356 gainers outnumbering 221 losers.

Company Analysis: Key Singapore Stocks in Focus

OUE REIT (OUEREIT SP): Resilient Performance Amid Sector Divergence

Recommendation: BUY | Fair Value: SGD 0.335

• 1H25 distribution per unit (DPU) rose 5.4% year-on-year to 0.98 Singapore cents, in line with expectations.
• Revenue and net property income (NPI) declined 10.6% and 10.1% respectively, primarily due to the divestment of Lippo Plaza in Shanghai. On a like-for-like basis, revenue and NPI would have fallen only 2.7% and 2%.
• Finance costs dropped 17.3% year-on-year, lifting distributable income by 11.3% to SGD 54.3m.
• If excluding 1H24’s capital distribution, core DPU actually increased 11.4%.

Segment Highlights:

• The hospitality segment was a drag, with revenue and NPI down 12.9% and 11.7%, and RevPAR falling 13.4% to SGD 233 due to high prior-year base, new Orchard Road supply, and softer travel sentiment. Hilton Singapore Orchard’s RevPAR fell 21%.
• The commercial segment was resilient: revenue and NPI grew 3.6% and 5.1% (like-for-like) to SGD 86.1m and SGD 65.2m. Office occupancy slipped 0.8 ppt QoQ to 95.5% but rental reversions remained strong at 9.1% in 2Q25 (vs. 9.9% in 1Q25). Retail occupancy (Mandarin Gallery) eased 0.5 ppt to 99%, but rental reversions surged 34.3% in the quarter.

Capital and ESG Developments:

• Aggregate leverage improved to 40.3% (from 40.6% in Mar 2025), with 71.1% of debt on fixed rates. A 25bps interest rate decline would boost DPU by 0.03 cents.
• OUEREIT raised ESG ambitions, targeting a 40% cut in Scope 1/2 GHG emissions for commercial assets (vs. FY23), 90% green financing, and a 25% water intensity cut (vs. FY17) by 2030. In FY24, Scope 1/2 emissions fell 1.7%, water intensity by 24.4%, and 69.4% of debt was green. 64.2% of leases were green, while 95.4% of assets are green-certified. GRESB score improved to 82 points and four stars.
• The board has a majority of independent directors (4 of 7), though only one female director. OUEREIT has rejected economically unattractive sponsor pipeline assets in the past.

Mapletree Logistics Trust (MLT SP): Soft Start to FY26 with Ongoing Portfolio Optimization

Recommendation: BUY | Fair Value: SGD 1.46

• 1QFY26 DPU fell 12.4% YoY to 1.812 Singapore cents, missing expectations (23.2% of full-year forecast).
• Gross revenue and NPI were down 2.4% and 2.1% YoY to SGD 177.4m and SGD 153.4m, hurt by weaker China contributions, FX headwinds, and lost income from divestments.
• Borrowing costs rose 2.3% to SGD 39.4m; this marks the fourth straight quarter of double-digit DPU decline. Excluding divestment proceeds, the DPU decline was 7.3% YoY.

Portfolio Performance:

• Portfolio occupancy slipped 0.5 ppt QoQ to 95.7%, mainly due to higher vacancies in Singapore (notably Mapletree Joo Koon Logistics Hub, completed in May 2025, at 42.4% occupancy). Management aims to raise this to ~80% by FY26-end.
• Hong Kong and Malaysia saw occupancy gains; India and Australia maintained full occupancy.
• Rental reversions in China improved from -9.4% to -7.5% QoQ, with management targeting flat reversions by end-FY26 if conditions stabilize. Other regions saw positive but moderating rental reversions: Singapore (5.2% vs. 7.0%), Japan (7.2% vs. 15.7%), South Korea (1.1% vs. 4.7%). Portfolio-wide rental reversions stood at +2.1% (+2.8% ex-China).

Capital Management & ESG:

• Aggregate leverage rose to 41.2% (from 40.7%) due to FX impacts. 84% of debt is hedged; cost of borrowing held steady at 2.7% for six quarters. FY26 borrowing costs expected at 2.7-2.8% (down from prior 2.9-3.0%).
• MLT continued to reposition its portfolio through AEIs and divested four properties since May 2025, with another SGD 150m in planned divestments for FY26.
• ESG rating was upgraded, driven by improved talent management. MLT targets carbon neutrality for Scope 1/2 by 2030 and net zero by 2050, expanding solar capacity to 100 MWp by 2030, and over 80% green certification by GFA (currently 45%).

City Developments Ltd (CIT SP): Strong Recovery Priced In, Taking a Breather

Recommendation: HOLD | Fair Value: SGD 6.01

• CDL’s share price surged 40.5% from its YTD trough by late July, prompting a downgrade to HOLD despite maintaining the fair value estimate.
• Two successful Core Central Region (CCR) launches (UpperHouse and The Robertson Opus) saw robust sell-through rates of 54% and 41%, with average prices around SGD 3,350-3,360 psf. This bodes well for CDL’s upcoming Zion Road (Parcel A) JV project, Zyon Grand, and the delayed Newport Residences launch.
• Singapore’s Grade A office rents continued to climb (+0.4% QoQ to SGD 12.10 psf/month in 2Q25, +1.3% YTD), while islandwide prime retail rents rose 0.7% QoQ to SGD 27.50 psf/month, supported by tourism and office crowd recovery.
• CDL announced the divestment of its 50.1% South Beach stake for SGD 834.2m (on a 100% property value of SGD 2.75b, a 3% premium), improving financial flexibility for potential special dividends and capital redeployment.

ESG Leadership:

• CDL maintains the highest ESG rating among peers, leading in managing ESG risks and opportunities. The company was the first in Southeast Asia to pledge net zero operational carbon by 2030 for wholly-owned assets, and aims for net zero whole life carbon by 2050, including major reductions in embodied carbon for new developments.

Singapore Equities: A Strategic Opportunity Backed by Structural Support

Singapore equities offer investors exposure to a resilient, well-regulated economy with strong governance and political stability. The local market provides geographic and currency diversification, attractive dividend yields, and defensive qualities during uncertainty.

The Monetary Authority of Singapore (MAS) is boosting market vibrancy via the SGD 5b Equity Market Development Program (EQDP), with an initial SGD 1.1b already allocated to three asset managers and more appointments set for late 2025. MAS will also inject SGD 50m under the Grant for Equity Markets (GEMS) scheme to enhance research and listing support. The focus will be on liquidity, participation, and especially on small- and mid-cap stocks. S-REITs are also positioned to benefit from this initiative.

Key STI Stocks by Market Capitalisation: Snapshot

Conclusion: Cautious Optimism with Structural Tailwinds

Despite persistent global risks and sector rotations, Singapore’s equity market remains well-supported by strong fundamentals, robust governance, and targeted policy initiatives. Investors are encouraged to stay vigilant but also to capitalize on quality names and structural growth opportunities, particularly in the small- and mid-cap universe and among leading S-REITs and blue-chip counters.

Broker: OCBC Investment Research Date: 25 July 2025