OCBC Investment Research
Date of Report: 20 August 2025
Global Markets Update August 2025: Tech Selloff, Sector Rotation, and Singapore Equity Insights

Overview and Market Pulse: US, Europe, and Asia

United States: Tech Selloff Reveals Fragile Market Reliance

The US equity landscape was shaken by a notable selloff in major technology stocks, triggered by a sharp 3.5% decline in Nvidia Corp. This downturn underscored the market’s narrow dependence on a handful of large-cap growth companies. Despite a majority of S&P 500 stocks posting gains, losses among the largest constituents — many of which have outperformed this year — erased broad-based advances. This highlights the vulnerability of a market leaning heavily on technology megacaps.
OpenAI CEO Sam Altman’s recent comments likening the current market environment to a “bubble” have further fueled caution. Investors are rotating out of tech ahead of retail earnings reports and Federal Reserve Chair Jerome Powell’s upcoming speech, likely reducing risk exposure.
The Dow Jones Industrial Average briefly touched an intraday record before closing nearly flat, up just 0.02%. The S&P 500 dropped 0.59%, and the Nasdaq Composite tumbled 1.46%. Meanwhile, the 10-year Treasury yield fell to 4.3%, offering a boost to real estate stocks, which led sector gains with a 1.8% increase — buoyed by strong housing data. In contrast, technology and communications services sectors fell by more than 1.9% and 1.2%, respectively.

Europe: Luxury and Spirits Gain, Defence Slips

The Stoxx Europe 600 Index gained 0.69%. Luxury and spirits-related stocks rallied after China’s push for trade-in programmes and pro-consumption policies. Conversely, defence stocks retreated following President Donald Trump’s efforts to end the Russia-Ukraine war, now over three years old.

Asia: Mixed Performance Amid Extended Rally

The MSCI Asia Pacific Index fell 0.2%, as markets paused following a prolonged rally. Tech-centric Hong Kong and Taiwan retreated, while Singapore, Malaysia, and Vietnam’s benchmarks advanced. Chinese equities reversed early gains, though institutional flows continue to bolster sentiment for emerging markets in Asia. Indian shares climbed for a fourth consecutive session, supported by improving relations with China and anticipated consumption growth from planned tax cuts.

Singapore Market Snapshot

Global Index and FX Performance

Key Commodities and FX Movements

Singapore Equity Research: Company Highlights and Analysis

China Aviation Oil (CAO SP): “Fly Me to the Moon” – Robust Growth, Margin Expansion

China Aviation Oil posted strong 1H25 results, exceeding expectations with revenue up 13.6% YoY to USD8.6 billion and net income rising 18.4% YoY to USD50 million. Volume growth was driven by middle distillates and other oil products, with notable jumps of 18.7% and 61.8% YoY, respectively.
Gross profit surged 25.7% YoY, supported by successful trading optimization and momentum in sustainable aviation fuel (SAF) trading in Europe — although SAF remains a small part of overall volumes. The share of results from associates, especially SPIA, climbed 18.6% YoY, reflecting higher refueling activity.
CAO’s strong net cash position of USD515 million as of 30 June 2025 provides flexibility for higher dividends or accretive acquisitions, both potential catalysts for further stock re-rating. Fair value (FV) estimate is raised to SGD1.50, pegged to a forward P/E of 11.0x.
Key Drivers for 2H25:

• Continued recovery in Chinese outbound travel, especially ahead of the Golden Week in October.
• Regulatory-driven SAF trading expansion in Europe.

ESG Note: CAO demonstrates strong corporate conduct, with industry-leading whistleblower protection and anti-corruption training, though it faces physical risk and community opposition typical of oil trading.

Latest Company Ratings and Fair Value Estimates

STI Stocks by Market Capitalisation: Rankings and Financial Metrics

Conclusion: Market Risks, Opportunities, and Analyst Guidance

The August 2025 market environment is defined by tech sector volatility, sector rotation, and shifting global sentiment. Singapore equities remain robust, with standout performances from China Aviation Oil, DBS Group Holdings, and several REITs, while caution is warranted for overvalued tech names. Investors are urged to balance optimism in cyclical recovery with conservative expectations amid ongoing macro risks and valuation concerns.

Analyst Disclosure and Ratings Policy

• Buy: Expected return (excl. dividends) >10% (or >30% for smaller caps); for REITs, total returns including dividends.
• Hold: Expected return (excl. dividends) between +10% and -5% (+/-30% for smaller caps).
• Sell: Expected return (excl. dividends) less than -5% (less than -30% for smaller caps).

All recommendations are medium-term calls based on a 12-month investment horizon.
Published by OCBC Investment Research Private Limited.