OCBC and Suntec REIT in focus: Weekly Review with SIAS

What happened?

In this week's Weekly Market Review in partnership with Securities Investors Association Singapore (SIAS), we discuss key developments in the global equity market and also share more about OCBC and Suntec REIT.

Watch the video to learn more about what we are looking out  for this week.

Weekly Market Review

1:54 - Macro Update

• The US markets experienced a decline, with the S&P 500 down 2%, with broad-based losses across tech stocks reflected in the NASDAQ and Dow Jones.
• In contrast, the STI performed relatively better, bolstered by gains in banking stocks, despite losses in property-related counters
• The highlight of the week was robust US jobs data for December, showing over 250k jobs created, exceeding market expectations of 150k
• This indicates a strong labour market and a resilient economy, leading to a sharp rise in US 10-year government bond yields to 4.77%, the highest level in over a year.
• Investors now anticipate fewer interest rate cuts from the Federal Reserve in 2025, with just one 25-basis-point cut expected in June
• Singapore banks like OCBC, DBS, and UOB saw gains, driven by elevated interest rate expectations supporting net interest margins
• Singapore property-related stocks and REITs underperformed due to concerns about high rates impacting sentiment.

4:50 Singapore market updates

STI Top performers:

• OCBC
• DBS
• Yangzijiang
• UOB
• Seatrium

STI worst performers:

• CapitalLand Investment
• Hongkong Land
• ThaiBev
• Mapletree Pan Asia Commercial Trust
• Mapletree Logistics Trust

5:53 - OCBC

• OCBC emerged as the top gainer in the STI last week, reaching a 52-week high above $17 before a slight pullback.
• The bank's third-quarter 2024 results showed a 9% year-on-year growth in net profit, driven by strong non-interest income, particularly a rise in wealth management fee income to $245 million, up from $196 million in Q3 2023.
• This offset a decline in net interest income due to a moderation in net interest margins, which dropped from 2.29% in Q4 2023 to 2.18% in Q3 2024.
• The bank's valuation metrics, such as a PE ratio of 10x and price-to-book ratio of 1.4x, are above historical averages.
• Its dividend yield of 5.1% remains attractive compared to the historical average of 4.3%.

Related Links:

• OCBC share price history and share price target
• OCBC dividend history and dividend forecasts

10:10 - Suntec REIT

• Gordon and Celine Tang, through their vehicle Aelios, have increased their offer for units in Suntec REIT to $1.19 per unit.
• Unitholders who have accepted their previous offer are also entitled to the revised offer price once the offer becomes or is declared unconditional in all respects.
• Suntec REIT derives 72% of income from Singapore, with remaining income  from Australia and the UK.
• In Q3 2024, net property income declined due to lower contributions from Suntec City's convention segment and properties in Australia and the UK, leading to reduced distributable income and dividend distribution per unit.
• Its aggregate leverage ratio stands at 42.3%, and an adjusted interest coverage ratio of 1.9 times.
• Current price-to-book valuation is 0.6 times, with a dividend yield of approximately 5%.

Related Links:

• Suntec REIT share price history and share price target
• Suntec REIT dividend history and dividend forecasts

14:00 - Technical Analysis

STI Technical Analysis

• The Straits Times Index (STI) hit a 17-year high of 3,886 points on Wednesday, driven by strong U.S. ISM service PMI data that exceeded expectations.
• The index saw a pullback subsequently, with global markets under pressure due to fears that interest rates will remain elevated throughout 2025.
• Key support levels for the STI 50-day exponential moving average at 3,750 and lower Bollinger Band at 3,722.
• MACD and RSI signal a weakening momentum, suggesting further pullbacks in the near term.
• Investors may consider accumulating STI at these support levels, as the banking sector could provide a catalyst for a rebound toward the all-time high of 3,906.

Dow Jones Technical Analysis

• The Dow Jones Index has been declining since December, with a significant 1.63% drop last Friday breaching the 100-day exponential moving average.
• Key support levels are at 41,770 points at the lower Bollinger Band and 41,156 points at the 200-day exponential moving average
• The MACD shows a renewed downtrend with no sign of convergence, and the RSI is weak at 33, approaching the oversold level of 30.
• Further pullbacks are expected ahead of the CPI data release.

S&P 500 Technical Analysis

• The S&P 500 dropped 1.54% last Friday, testing the strong support level around 5,800 points, a hammer candlestick formation suggests potential support at this level.
• If breached, the index could fall significantly to 5,580 points, though testing the 200-day exponential moving average appears unlikely for now.
• MACD remains negative, indicating ongoing downward pressure, while the RSI is weak at 39, below the neutral 50 mark.
• A rebound may occur if the index consolidates around 5,800 points, with the 14-day RSI moving average at 46 acting as an initial resistance level.

Nasdaq Composite Technical Analysis

• The NASDAQ composite index has pulled back to the lower bound of the Bollinger Band at 19,083 points but closed slightly below the 50-day exponential moving average at 19,281 points.
• The 100-day exponential moving average, previously a resistance point, may act as a support level at 18,785 points if tested.
• The MACD indicator shows the most negative momentum among U.S. indices, with a significant gap between the MACD and signal lines, while the RSI at 43 indicates a continued downward trend.
• Market movement is expected to remain limited until Wednesday's CPI data

What to look out for this week

• Wednesday, 15 Jan: US Consumer Price Index (CPI) data
• Thursday, 16 Jan: Singapore 6-month T-bill auction 

Check out the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar.

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