OCBC Investment Research
Date of Report: 30 April 2025

Global Market Pulse: Key Insights, Stock Analysis, and Top REITs for Investors in 2025

Market Overview: Global Equities Find Support Amid Trade Tensions and Tariff Shifts

Global equity markets demonstrated resilience in the face of ongoing trade tensions and macroeconomic uncertainties. In the United States, major indices closed higher as investors grew optimistic that leading corporates could navigate slowing growth and tariff disruptions. President Donald Trump’s executive order to ease auto tariffs was perceived as a positive move in the trade war saga.

• US Major Indices: Dow Jones Industrial Average surged 0.75% (+300 points), S&P 500 advanced 0.58%, while Nasdaq Composite gained 0.55%.
• Top Movers: General Motors and Apple rebounded from lows; Honeywell soared 5.4% on strong quarterly results.
• Market Sentiment: Despite a dip in consumer confidence and a 3.9% drop in job openings, markets looked past negative data, focusing on potential tariff trade deals to sustain momentum.
• Bond and FX Market: 10-year Treasury yields slipped below 4.2%. The US dollar strengthened, while gold and oil prices declined.

In Europe, the Stoxx Europe 600 Index climbed 0.36%, buoyed by positive earnings and tariff news. Banking and healthcare led gains, but consumer products, services, and retail lagged.

Asia-Pacific markets were mixed, with the MSCI Asia Pacific Index up 0.7% on Chinese tech rallies and India’s Reliance Industries extending gains on robust earnings. However, sentiment remained fragile due to poor results from Super Micro Computer Inc, the US-China tariff standoff, and regional geopolitical tensions.

Singapore Market Snapshot

Global Indices and Commodities

Research Focus: In-Depth Analysis of Leading REITs and Trusts

CapitaLand Ascendas REIT (CLAR SP): Robust Rental Reversions Offset by Declining Occupancy

• Rental Reversions: Achieved portfolio rental reversions of +11.0% in 1Q25, outpacing the previous quarter’s +8.6% and management’s mid-single digit FY25 guidance.
• Regional Breakdown: 1Q25 rental reversions were +7.0% (Singapore), +10.3% (US), and a remarkable +59.0% (Australia). No renewals in UK/Europe.
• Singapore: +9.0% (industrial/data centres), +5.8% (business space/life sciences), +2.5% (logistics).
• US: +0.7% (business space/life sciences), +11.5% (logistics).
• Australia: Major uplift driven by logistics segment and market-to-market renewals.
• Occupancy: Portfolio occupancy dropped 1.3 percentage points quarter-on-quarter (QoQ) to 91.5%. Australia posted the steepest decline, notably a Sydney logistics property fell from 100% to 0% occupancy, though leasing discussions are underway. US and Singapore occupancy fell by 0.9ppt to 88.0% and 91.6% respectively, while UK/Europe saw a minor drop to 98.9%.
• Leverage: Aggregate leverage ratio increased from 37.7% to 38.9%, attributed to the acquisition of a US logistics property for USD115.8m (SGD150.3m), expected to yield 7.6% net property income before transaction costs.
• Debt Profile: Weighted average all-in debt cost fell 10bps to 3.6%; hedged debt ratio decreased from 82.7% to 73.6%.
• Forecasts and Valuation: FY25 and FY26 DPU forecasts raised by 0.5% and 0.6% respectively due to lower debt costs, partially offset by FX and occupancy assumptions. Cost of equity increased from 6.6% to 6.8% amid market volatility. Fair value estimate revised down to SGD3.21.
• ESG: Upgraded rating (Sep 2023) for superior governance, transparency in executive pay, robust ethics, and a 30% green financing ratio. Targeting all properties to achieve minimum green rating by 2030 and net-zero discrimination/governance lapses.

Stoneweg European REIT (SERT SP): Solid Logistics, Shaky Offices, and Tax Optimisation Ahead

• Distribution: Indicative 1Q25 DPU of 3.374 Euro cents, down 3.7% YoY due to higher interest costs, but 0.3% higher QoQ and 27.5% of full-year forecast.
• Operations: Gross revenue up 0.5% YoY to EUR53.6m; net property income up 2.4% YoY (EUR33.5m), aided by reversal of bad debt provisions. Like-for-like NPI rose 7.4% YoY.
• Occupancy: Portfolio occupancy declined 1.5ppt QoQ to 92%. Office properties fell sharply (-5.2ppt to 85.7%), while logistics/industrial (L&I) assets were stable (-0.2ppt to 94%).
• Rental Reversions: Portfolio rental reversion at +1.7%, with L&I assets up 4.9% and offices down 0.6%. Management remains optimistic for further positive reversions due to under-rented assets.
• Major Lease: 20-year lease renewal with NN Group NV (Netherlands), including an agreement to upgrade Haagse Port.
• Leverage and Capital: Aggregate leverage rose to 42.9% (from 41.2%), in part due to CAPEX drawdowns. Refinanced a EUR450m bond (2.1%) with a EUR500m bond (4.25%), raising all-in interest rate by 111bps to 4.16%. 89% of debt is hedged.
• Valuation: FY25 and FY26 DPU forecasts raised by 6.3% and 6.1%. Cost of equity increased to 9%; terminal growth rate lowered to 1.25% due to macro uncertainty. Fair value remains at EUR1.81.
• ESG: Rating downgraded (Dec 2024) over non-pay benefits, but SERT emphasizes employee training and boasts a majority-independent board. Holds 48 green building certificates, targeting net-zero operational carbon by 2040.

Frasers Centrepoint Trust (FCT SP): Steady Performance and High Rental Uplifts

• Distribution: 1HFY25 DPU up 0.5% YoY to 6.054 Singapore cents, meeting expectations.
• Financials: Gross revenue and net property income increased by 7.1% and 7.3% YoY, respectively. Distributions from investments surged 83.2%, while finance costs decreased 1.6%. Larger cash management fees and provisions for Cathay Cineplexes limited DPU growth.
• Occupancy and Rental Uplift: Robust rental reversions of +9.0% (leases covering 10% of NLA), with all malls recording increases. Standouts: Tampines 1 (+13.3%), Century Square (+11.6%), Causeway Point (+10.0%). Portfolio occupancy held at 99.5% (excluding Hougang Mall under AEI), with all but White Sands (98.7%) above 99%.
• Shopper Traffic: Shopper traffic and tenant sales grew 1.0% and 3.3% YoY in 1HFY25.
• Leverage and Debt: Aggregate leverage fell to 38.6% from 39.3%. No refinancing needed for the rest of FY25. Debt hedging ratio rose to 75.8%, and average cost of debt dropped 10bps to 3.9% (1HFY25 average), with 2QFY25 at 3.8%.
• Acquisition Funding: Secured 3.25% debt cost for Northpoint City South Wing acquisition, below the 3.4% assumption. Perpetual securities may fund the remainder (cost ~4.2%).
• Forecasts and Valuation: FY25 and FY26 DPU forecasts increased by 0.6% and 1.3%. Fair value estimate raised to SGD2.50.
• ESG: Upgraded rating (June 2024) due to superior talent management, business ethics, and green building initiatives. Solar panel installations and EV charging stations planned across malls, targeting net-zero carbon by 2050. All 10 properties BCA Gold certified, and FCT achieved a 5-Star rating in the 2024 GRESB Real Estate Assessment for the fourth consecutive year.

China Strategy: April Politburo Meeting Signals Proactive Stimulus and Cautious Optimism

• The April Politburo meeting called for front-loading the CNY2 trillion stimulus plan, reinforcing a supportive policy tone amid rising external shocks but stopped short of announcing new stimulus.
• Focus remains on accelerating existing policy implementation. Policymakers are expected to react to tariff impacts as needed, with potential for further fiscal support (CNY1–1.5 trillion) in 2H25.
• The next key policy watchpoint is the July Politburo meeting, which will clarify the tariff situation and future stimulus direction.

Selected Equity Coverage: Latest Rating and Valuation Summary

STI Stocks: Market Capitalisation, Yields, and Valuation Metrics

Conclusion: Navigating Uncertainty with Informed Choices

Investors face a complex landscape marked by trade tensions, shifting tariffs, and macroeconomic challenges. However, opportunities persist in resilient REITs, well-managed blue chips, and sectors benefiting from policy support and structural trends. Staying attuned to company fundamentals, ESG developments, and evolving policy backdrops will be key to capturing value and managing risks in 2025.