Broker: OCBC Investment Research
Date of Report: 5 August 2025

Global Markets Rebound Amid Rate Cut Hopes: In-Depth Equity Insights and Company Analysis

Market Overview: Global Equities Rally on Rate Cut Prospects

Global equity markets saw a robust rebound as weaker-than-expected US jobs data reignited expectations of imminent interest rate cuts by the Federal Reserve. The likelihood of a September rate cut surged to 92.1% from under 40% prior to the latest employment report. The Dow Jones Industrial Average jumped 1.34%, the S&P 500 climbed 1.47%, and the Nasdaq Composite surged 1.95%, with tech megacaps leading the rally. US Treasury yields fell, with the 2-year yield down to 3.68% and the 10-year just below 4.2%.

Despite the bullish sentiment, analysts remain cautious, citing persistent headwinds such as growth concerns, tariff issues, and elevated policy uncertainty. The unemployment rate at 4.2% signals ongoing labor market resilience, suggesting that expectations for rapid rate cuts may be premature. Inflation fears also add complexity to the Federal Reserve’s decision-making process.

Regional Performance: Europe and Asia Highlights

• Europe: European shares rebounded following their sharpest decline since April in the previous session. The Stoxx Europe 600 Index rose 0.90%, powered by banks and insurance stocks, while automakers and retailers lagged. Swiss equities faced volatility due to a 39% US export tariff, with the SMI Index dropping as much as 1.9% before recovering most losses.
• Asia: The MSCI Asia Pacific Index ended slightly higher after paring earlier losses. Japanese stocks led regional declines, but South Korea’s market gained on hopes of tax policy revisions. Hong Kong equities advanced amid optimism over US-China tariff negotiations, with mainland investors pouring record funds into ETFs tracking the Hong Kong market.

Key Market Statistics and Indices Performance

FX & Commodities: USDSGD 1.2876 (+0.2%), USDJPY 147.09 (+0.2%), WTI Crude \$66.29/bbl (-1.5%), Gold \$3,373.6/oz (+0.3%)

Company Focus: Agricultural Bank of China (HK & SH)

Agricultural Bank of China (1288 HK) — Earnings Resilience Amid Macroeconomic Headwinds

• FY25 Core Earnings: PATMI is expected to grow by 2% in FY25, despite NIM pressure and potential for higher credit impairment losses. ABC demonstrates stronger earnings resilience compared to major peers, with EPS forecasts revised down less than the sector average.
• 1Q25 Performance: ABC recorded 1.7% YoY growth in PATMI to CNY19.5b, with annualised ROE at 11.40% (down 0.9ppt YoY). Total assets, loans, and deposits grew 3.4%, 2.6%, and 4.3% QoQ, respectively.
• Asset Quality: ABC’s NPL ratio stood at 1.28% (down 2bps QoQ), and its NPL coverage ratio was 298% (down 1.8ppt QoQ but still high among peers). The bank has a sufficient buffer to withstand pre-provision operating profit pressures.
• Macroeconomic Context: China’s macro environment remains soft, but further easing is likely to help offset US tariffs. PBoC is expected to avoid sharp rate cuts to support the CNY. CNY loans growth was 7.1% YoY in June 2025, consistent with May but slower than 2023/24 averages. New CNY loans rose 5.2% YoY in June after declines in April and May. Mortgage rates edged up 4bps to 3.13% in 1Q25, but remain 101bps below the previous year, sustaining NIM compression concerns. The residential property sector remains weak, with transaction values down 5.2% YoY in 1H25 and ongoing price declines in major cities.
• Valuation: Target P/B multiple adjusted to 0.71x FY26 book value, fair value estimate revised to HKD 5.85 (from HKD 5.90). Rating: Upgrade to BUY.
• ESG: ESG rating unchanged since December 2023. ABC is a sector leader in staff management and data protection, with room to improve whistleblower protections. Consumer protection is on par with peers.

Agricultural Bank of China (601288 CH) — Holding Steady but Facing Macroeconomic Challenges

• FY25 Core Earnings: 2% PATMI growth expected, with EPS revisions less negative than peers.
• 1Q25 Performance: Similar to HK listing, 1.7% YoY PATMI growth to CNY19.5b, ROE 11.40% (-0.9ppt YoY). Assets, loans, deposits rose 3.4%, 2.6%, and 4.3% QoQ.
• Asset Quality: NPL ratio 1.28% (down 2bps QoQ), NPL coverage 298% (down 1.8ppt QoQ), indicating a robust buffer.
• Macroeconomic Context: Loan growth and property sector trends mirror those highlighted above.
• Valuation: Target P/B multiple set at 0.83x for FY26, fair value estimate revised down to CNY 6.35 (from CNY 6.65). Rating: Downgrade to HOLD.
• ESG: Staff management and data protection are key strengths, with business ethics policies in place but lacking whistleblower protection.

Singapore Equities: 60 Reasons for Long-Term Optimism

Singapore celebrates its 60th year of independence, marking a transformation from swampland to a digital powerhouse. The nation’s growth has been driven by strategic investments and economic planning, with a shift from manufacturing in the 60s and 70s to a leading digital economy today. As regional affluence increases, Singapore is well-positioned for further opportunities and growth in the next decade. (A comprehensive list of 60 reasons for continued investment optimism is highlighted, underscoring the country’s economic resilience and long-term prospects.)

Singapore Market: STI Stocks by Market Capitalisation

Latest Company Reports and Analyst Ratings

• Agricultural Bank of China (1288 HK / 601288 CH): BUY (HKD 5.85) / HOLD (CNY 6.35) — Expecting earnings resilience, asset quality remains sound.
• CapitaLand Ascott Trust: BUY (SGD 1.02) — Positioning for the next phase of portfolio growth amid uncertainty.
• Singapore Post: BUY (SGD 0.590) — Focusing on break-up value.
• Sheng Siong Group: BUY (SGD 2.37) — Accelerated new store openings.
• Frasers Logistics & Commercial Trust: BUY (SGD 1.06) — Strong rental reversions, offset by higher vacancies.
• Keppel Ltd: BUY (SGD 10.20) — Accelerating asset monetization.
• Starhill Global REIT: HOLD (SGD 0.510) — Stable performance and outlook.
• Seatrium Limited: BUY (SGD 2.76) — Strategic repositioning.
• CapitaLand India Trust: BUY (SGD 1.44) — Strong 1H25 performance.
• Mapletree Pan Asia Commercial Trust: BUY (SGD 1.45) — VivoCity outperformance continues.
• Keppel Infrastructure Trust: BUY (SGD 0.53) — Stable with digital infrastructure expansion pending.
• Keppel REIT: HOLD (SGD 0.95) — Results in line with expectations.
• CapitaLand China Trust: HOLD (SGD 0.70) — Recovery delayed.
• First REIT: HOLD (SGD 0.27) — Currency volatility weighs on returns.
• Mapletree Industrial Trust: BUY (SGD 2.39) — Higher rental reversions, lower DPU.
• Hong Kong Exchanges & Clearing: BUY (HKD 509.70) — Positioned for robust growth.
• Singapore Airlines: HOLD (SGD 7.10) — Record passenger numbers offset by Air India losses.
• Frasers Centrepoint Trust: BUY (SGD 2.58) — Strong position despite lease hiccups.

Conclusion: Navigating the Opportunities and Risks in Global and Regional Markets

The current market landscape is shaped by shifting monetary policy expectations, sector-specific headwinds, and regional growth catalysts. While optimism has returned on the back of potential US rate cuts, investors should remain aware of persistent macro and policy uncertainties. Singapore’s 60th anniversary underscores a long history of resilience and adaptability, further supporting the case for long-term investment in its equities. With a comprehensive view of sector and company fundamentals, informed investors can navigate opportunities across global and regional markets.