OCBC Investment Research

22 May 2025

Market Turmoil Grips Wall Street as Bond Yields Surge; CDL’s Singapore Sales Soar

Market Commentary: United States

• A bond market sell-off intensified following a disappointing 20-year Treasury note auction, reflecting investor concerns over escalating US debt levels and demanding higher yields for longer maturities [[1]].
• The US\$16 billion Treasury sale, featuring a 5% coupon—the highest since its reintroduction in 2020—faced weak demand, signaling eroding confidence in US fiscal stability. The 10-year Treasury note yield jumped to 4.595%, while the 30-year yield reached a one-year peak of 5.089% [[1]].
• The stock market rally faltered under the pressure of rising yields. The Dow Jones Industrial Average plummeted 817 points, or 1.91%. The S&P 500 declined 1.61%, with financials, real estate, and healthcare sectors leading the downturn. The Nasdaq Composite fell 1.41% amid a sell-off in Big Tech stocks. Apple shares dropped 2.3% following ChatGPT maker OpenAI’s agreement to acquire Sir Jony Ive’s hardware start-up [[1]].
• Normally a non-event, the auction of 20-year Treasury notes sparked concern that President Donald Trump’s proposed tax cuts would exacerbate already significant budget deficits, at a time when global appetite for US assets is waning. Concerns about the safe-haven status of US debt were heightened by President Trump’s tariff announcements and Moody’s Investors Service’s downgrade of the country’s credit score below the top triple-A level [[1]].
• Trump’s tax cut proposal, dubbed the “big, beautiful bill,” is set to extend tax cuts from his first term in 2017. However, it has faced criticism from officials advocating for deeper cuts in healthcare programs and clean-energy tax credits. The proposal is projected to add at least US\$3 trillion to US debt over the next decade. The CBOE Volatility Index briefly exceeded 20, reflecting widespread market anxiety [[2]].

Market Commentary: Europe

• The Stoxx Europe 600 Index saw little change. The UK’s FTSE 250 fell 0.7% after inflation rose more than expected to its highest rate in over a year, causing domestically focused UK stocks to decline [[2]].
• The European stock rally appears to be losing momentum, with the Stoxx 600 now approximately 2% below its March record high, driven by increasing bond yields [[2]].

Market Commentary: Asia

• Asian equities were anticipated to decline on Thursday due to concerns regarding the US’s growing deficit [[2]].
• The MSCI Asia Pacific Index increased by 0.6% the previous day. TSMC, Alibaba, and Tencent significantly boosted the regional benchmark. Equities also traded higher in Hong Kong and India [[3]].

Singapore Market Statistics

• Straits Times Index: 3,882.6 (0.1% increase) [[3]]
• FTSE ST Financials: 1,541.8 (0.3% decrease) [[3]]
• FTSE ST REITs: 626.1 (0.2% increase) [[3]]
• FTSE ST Real Estate: 618.4 (0.3% increase) [[3]]
• Volume (m): 982.2 (3.4% decrease) [[3]]
• Turnover (m): 1,160.7 (13.7% increase) [[3]]
• 52 week range: 3,198.4 – 4,005.2 [[3]]
• Gainers / losers: 270 / 207 [[3]]

World Indices

• S&P 500: 5,844.6 (-1.6%) [[3]]
• DJI: 41,860.4 (-1.9%) [[3]]
• Nasdaq Comp: 18,872.6 (-1.4%) [[3]]
• FTSE 100: 8,786.5 (0.1%) [[3]]
• STOXX Europe 600: 553.8 (0.0%) [[3]]
• Nikkei 225: 37,299.0 (-0.6%) [[3]]
• Hang Seng Index: 23,827.8 (0.6%) [[3]]
• SHSE Comp Index: 3,387.6 (0.2%) [[3]]
• SZSE Comp Index: 2,010.0 (0.0%) [[3]]
• SHSE SZSE CSI 300: 3,916.4 (0.5%) [[3]]
• KLCI: 1,544.8 (-0.3%) [[3]]
• JCI: 7,142.5 (0.7%) [[3]]
• SET: 1,179.8 (-0.8%) [[3]]
• KOSPI: 2,625.6 (0.9%) [[3]]
• TWSE: 21,803.9 (1.3%) [[3]]

FX & Commodities

• USDSGD: 1.2889 (0.5%) [[3]]
• USDJPY: 143.68 (0.6%) [[3]]
• USDCNY: 7.202 (0.2%) [[4]]
• USDHKD: 7.832 (-0.1%) [[4]]
• WTI Crude USD/bbl.: 61.57 (-1.6%) [[4]]
• Brent USD/bbl.: 64.91 (-0.7%) [[4]]
• Gold USD/oz.: 3,315.0 (0.8%) [[4]]
• Silver USD/oz.: 33.39 (0.9%) [[4]]

Research Ideas: City Developments Ltd (CIT SP)

Some Encouraging Signs from 1Q25 Updates

• Robust 1Q25 residential sales value of SGD1.9b in Singapore, representing year-on-year (YoY) growth of 155% [[2]].
• High committed occupancy rates for Singapore office and retail portfolios; group hotel revenue per available room (RevPAR) inched up 1.2% YoY [[2]].
• Net gearing ratio (including fair value surplus on investment properties) increased 3 ppt quarter-on-quarter (QoQ) to 72% [[2]].

CDL provided a business update for 1Q25. For its property development segment, CDL and its joint ventures (JV) and associates sold 795 units with a total sales value of SGD1.9b in 1Q25, with the latter representing an increase of 155% YoY (volume rose 85%), thanks in part to the successful launch of The Orie project in Toa Payoh (668 units, or 86% sold on launch weekend at SGD2,704 per square foot (psf)). Looking ahead, CDL intends to launch its Zion Road (Parcel A) JV project in 2H25. This is a mixed-use integrated development with direct connectivity to Havelock MRT station [[2]]. For its overseas markets, the most prominent update was CDL finally obtaining approval for its GBP1.1b residential-led mixed-use scheme in Mortlake, South West London, for 1,068 homes, a 1,200-pupil secondary school academy, retail, offices, hotel, cinema and nine acres of green space [[2]].

CDL’s office and retail portfolios in Singapore achieved high committed occupancy rates of 97.2% and 96.2%, although this was a decline of 0.5 ppt and 1.8 ppt QoQ respectively [[3]]. All three of the Group’s wholly-owned office assets delivered positive rental reversions, while City Square Mall recorded solid rental reversions of 15% on its renewed leases. As for CDL’s overseas markets, Jungceylon Shopping Center in Phuket and its UK commercial portfolio saw a sequential increase in committed occupancy, but there were still challenges in China, as evidenced by the subdued committed occupancy of 52.7% for CDL’s China commercial portfolio [[3]]. As for CDL’s hospitality operations, overall group RevPAR rose 1.2% YoY to SGD139.7, as the 1.8% increase in average room rate was partially offset by a dip in occupancy by 0.7 ppt YoY. Singapore’s RevPAR fell 16.7% YoY to SGD153.7 but this was not surprising given a high base effect resulting from a series of high-profile concerts which took place in 1Q24 [[3]].

From a balance sheet perspective, CDL’s net gearing ratio (including fair value surplus on investment properties) increased from 69% (as at 31 Dec 2024) to 72%, partly due to the full payment for the acquisition of a 51% interest in a mixed use development site in the Xintiandi area of Shanghai’s Huangpu District [[3]]. CDL said that it had SGD3.8b in cash and available undrawn committed bank facilities. Management’s focus will continue to be on capital recycling activities, and it has lined up significant divestments, with proceeds potentially earmarked to reduce its gearing, redeployed for investments and fund dividends and share buybacks [[3]]. As announced by CDL on 12 Mar 2025, regarding its previous board dispute, the court proceedings had been settled and discontinued. After this saga, investors will be closely monitoring CDL’s execution and future corporate governance practices ahead [[4]]. After adjustments, our fair value estimate inches down from SGD6.02 to SGD6.01 [[4]].

CDL’s ESG Updates

CDL’s ESG rating has been consistently maintained at the highest level. CDL is ahead of its peers in adopting practices to manage ESG opportunities and risks related to its diverse real estate businesses. Given its good efforts to reduce wastage of energy and water, this may help to capture tenants’ demand for sustainable properties [[4]]. According to CDL, it was the first real estate conglomerate in Southeast Asia to pledge towards net zero operational carbon by 2030, covering new and existing wholly-owned assets under its direct management and operational control. CDL further extended its pledge towards a net zero whole life carbon emissions approach, with maximum reduction of embodied carbon in new developments by 2030 and for all buildings to be net zero by 2050 [[4]]. BUY. (Research Team) [[4]]

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