OCBC Investment Research
Date of Report: 18 August 2025
Global Market Shifts, Singapore Equities, and Key Stock Picks: OCBC Investment Research’s Comprehensive August 2025 Analysis

Market Overview: Global Sentiment and Regional Performance

Global equity markets experienced volatility as US stocks retreated from record highs amid renewed concerns about inflation and geopolitical developments. The S&P 500 and Nasdaq Composite both pulled back after touching new highs, while the Dow Jones Industrial Average managed a slight gain, bolstered by specific stock surges. European indices held steady, but sector rotation was evident, and Asia Pacific markets showed mixed results, with Japan outperforming on strong economic data.

US Market Recap

• Consumer sentiment declined for the first time since April, with the University of Michigan’s August index dropping to 58.6 from 61.7 in July.
• Concerns grew that President Donald Trump’s tariffs could further fuel inflation.
• Dow Jones ended up 0.08%, supported by UnitedHealth’s 12% rally following Berkshire Hathaway’s \$1.6 billion investment.
• Weekly gains: Dow +1.74%, S&P 500 +0.94%, Nasdaq +0.81%.
• Attention now shifts to the Federal Reserve’s Jackson Hole symposium, with futures pricing in at least two more rate cuts this year, despite internal division among Fed officials and a 4.2% unemployment rate.
• Geopolitically, President Trump left the Alaska summit without a Ukraine ceasefire and appeared open to territorial concessions to Russia.

European Market Recap

• The Stoxx Europe 600 Index was flat after hitting its highest level since March. Gains in mining and healthcare offset weakness in personal care, real estate, and technology – the latter hit by disappointing results from Applied Materials Inc.
• Second consecutive weekly gain for the benchmark.

Asia-Pacific Market Recap

• The MSCI Asia Pacific Index rose 0.7%, heading for a 2.4% weekly gain.
• Japan’s stock market hit another record high, driven by financial stocks amid rate hike speculation. Hong Kong lagged after weak China data but remains a regional outperformer year-to-date.

Singapore Market Snapshot: STI and Sector Performance

• Straits Times Index (STI) closed at 4,230.5, down 26 points (-0.6%).
• Financials, REITs, and real estate sectors all experienced declines between 0.5% and 1.0%.
• Trading volume and turnover were down 24.2% and 17.4% respectively.
• Gainers vs. losers: 239 to 301.

Research Highlights: Company Deep Dives

Golden Agri-Resources (GGR SP): Momentum Could Weaken in 2H25

• 1H25 Revenue: USD 6.2 billion, up 19.6% YoY due to higher plantation output and firmer CPO prices (average: USD 1,090/tonne, +18.8% YoY).
• EBITDA: USD 566.3 million, up 14.5% YoY, though margin compressed to 9.2% from 9.6% a year ago.
• PATMI: USD 160.3 million (+56.5% YoY); Underlying PATMI: USD 232.5 million (+23.2% YoY).
• Upstream Segment: Revenue rose 30.4% YoY; EBITDA up 50.7% YoY to USD 320 million.
• FFB Production: +10% YoY to 4.4 million tonnes; Palm product output +9% YoY to 1.3 million tonnes.
• Palm, Laurics & Others: Revenue up 19.7% YoY to USD 6.1 billion, but EBITDA declined 12.8% to USD 245.7 million as margins fell from 5.5% to 4.0% amid competition and weaker refining margins.
• Outlook: Full-year FFB production guidance revised down to 1-2% YoY growth, citing dry weather and aggressive replanting. 3Q25 expected flat YoY; 4Q25 could see a decline.
• Production cost guidance: Maintained at USD 310-315/tonne (slight YoY increase).
• Valuation: Stock trades at 0.5x forward P/B, near historical average (0.53x). Rating: HOLD; Fair Value: SGD 0.27.

ST Engineering Ltd (STE SP): Strong Order Book Momentum

• 1H25 Revenue: SGD 5.9 billion, +7% YoY (+8% ex-forex), with growth across core business.
• EBITDA: SGD 871 million (+11% YoY); EBIT: SGD 602 million (+15% YoY).
• PATMI: SGD 403 million, up 20% YoY.
• Dividend: 4.0 Singapore cents per share for 2Q25 (total 8 cents 1H25, unchanged YoY).
• Commercial Aerospace (CA): Revenue +5% YoY to SGD 2.3 billion; EBIT +18% YoY to SGD 223 million, led by Engine MRO and nacelle services. Passenger-to-freighter (PTF) remained weak.
• Defence & Public Security (DPS): Revenue +12% YoY to SGD 2.6 billion; EBIT +13% YoY to SGD 367 million. Growth driven by higher revenue and cost control. STE sees structural growth in global defense spending, with opportunities in the Middle East and Eastern Europe.
• Urban Solutions & Satcom (USS): Revenue flat YoY at SGD 921 million; EBIT up 32% YoY to SGD 12 million (improved margin mix and cost discipline).
• Order Book: SGD 31.2 billion (+18% YoY), with SGD 5.0 billion expected for delivery in 2H25. New contracts in 1H25: SGD 9.1 billion (SGD 4.4b in 1Q, SGD 4.7b in 2Q).
• Valuation: Stock trades at 28x forward P/E, about three standard deviations above historical average. Rating: HOLD; Fair Value: SGD 8.90 (raised from SGD 8.54).

Latest Analyst Ratings: Key Singapore Stock Picks

STI Market Capitalisation Leaders: Key Metrics and Recommendations

Conclusion: Navigating Volatility with Strategic Stock Selection

August 2025 sees global markets wrestling with macro headwinds and sector rotations. Singapore’s equity market remains resilient, underpinned by strong results from key stocks such as Golden Agri-Resources and ST Engineering, though both are rated as HOLD for now due to valuation and near-term growth concerns. Investors should monitor global monetary policy, geopolitical risks, and company-specific drivers as they position portfolios for the remainder of the year.