Investment opportunities in 1H 2025: 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 with Isaac Lim, Chief Market Strategist at Moomoo Singapore. 

Watch the video to learn more about the market outlook for the first half of 2025.

Weekly Market Review

3:47 - Macro Update

• Chinese stocks initially dropped 6% but rebounded after announcements of stimulus injections.
• The Chinese government exceeded its 5% GDP growth target of 5.4% in 2024.
• In Canada, Prime Minister Justin Trudeau resigned amid party infighting.
• U.S. 10-year yields hit 2007 highs near 5%,
• China faces deflationary pressures, with 30-year yields falling below Japan's, prompting concerns of "Japanification."
• Germany saw its highest company insolvency rate since 2008
• U.S. dollar surged to levels near 2021 highs
• Donald Trump starts his rhetoric by talking about taking over Greenland, Canada, and Panama Canal
• Donald Trump launched a cryptocurrency, Trump Coin.

6:47 - Major Themes For H1 2025

7:04 - 3 Ts: Trump, Tariffs & Trade Wars

• Donald Trump to be inaugurated as the 47^th President of The United States.
• A shift of tone from protectionism during his first presidency to a more expansionist agenda.
• Announced a focus on cryptocurrency and digital assets.
• Revealed a conversation with China's leadership about fostering a "new era of world peace.
• His policies and potential tariffs could spark retaliation from U.S. trade partners, risking a trade war 2.0 with China and possibly others.
• Investors should focus on Trump's actions rather than his rhetoric, as they will likely drive market outcomes.

9:04 - US Outperformance Still Expected But Temper Expectations

• Sustained dominance of the U.S. market to continue, but growth may be measured.
• The rise of "mega caps" (MAC-7 or MAC-10), the top-performing counters in the S&P 500, has redefined market categorisation.
• These stocks are now more expensive than before.
• A key challenge for the U.S. now is its $7 trillion debt, which could pose risks similar to the 2023 market turmoil caused by the debt ceiling crisis.
• Investors are encouraged to explore undervalued opportunities both within the U.S. market, and especially in other regions.

11:59 - USD Reigns Supreme Amidst Persistent Inflation

• US labour market remains robust.
• Global bond markets continue to falter
• Despite recent CPI numbers, the view of a strong dollar for the first half of the year remains unchanged.
• Markets are also pricing in the inflationary fiscal policies that Trump is expected to push in the White House
• Initial expectations of three Federal Reserve rate cuts for 2025 have shifted to just one, likely in mid-year, reflecting rapidly changing market conditions.

12:45 - 3 Key Plays For Investors

12:54 - Stay Adaptable Looking To US Large/Mid Caps

• Market consolidation is expected in the near term
• U.S. large and mid-caps, have a cheaper valuation as compared to the overextended mega caps.
• There is potential for upward movement, with mid-caps showing tempered valuations at around PE of 23.6%.
• Undervalued opportunities exist outside the U.S., and diversifying portfolios geographically can reduce concentration risk to just the U.S.

14:29 - USD Is King But Put That Cash To Work In Fixed income

• Leverage the strong U.S. dollar while mitigating inflation's erosion of cash value.
• Investors should capitalize on the high-rate environment by locking in shorter-term yields
• Lock in yield by investing for 2–3-year or rolling over 3–5-month T-bills.
• U.S. Treasuries and investment-grade bonds remain preferred options for H1 2025. 

15:50 - Don’t Blindly Chase Alpha, Consider Dividends Too

• Dividend portfolios provide consistent cash flow, particularly valuable during periods of global inflationary pressure and potential market downturns
• Historical trends, such as yield curve inversions followed by recessions, suggest a possible S&P sell-off in the coming months.
• The Singapore market, with its low volatility, strong governance, and robust currency, is well-suited for dividend investing.
• Singapore banks, is a good option because of its potential capital appreciation and also attractive dividend yields.
• Other key sectors are industrials, defensive stocks, and REITs.

Related links

• DBS share price history and share price target
• OCBC share price history and share price target
• UOB share price history and share price target
• Discover opportunities in Singapore REITs

Read also: DBS, UOB and OCBC near all-time highs. Worth buying at 5% dividend yield?

23:10 - Technical Analysis

STI Technical Analysis

• The Straits Times Index (STI) recently reached a 17-year high of 3,887 points but faced a pullback due to strong US nonfarm payroll data and concerns over potential rate hikes.
• It is currently holding around the 3,800 pivot level, the next support levels are the 50-day exponential moving average at 3,750 and 3,724 at the lower bound of the Bollinger Band.
• Recent price channel weakness suggests the STI might enter a range-bound trading phase.
• Potential catalysts include Donald Trump's policy announcements or local bank earnings post-Chinese New Year.
• Indicators like MACD signal downward pressure, while the neutral RSI at 51 suggests limited momentum.
• Investors may consider accumulating at key support levels.

Dow Jones Technical Analysis

• The Dow Jones Index, currently at 43,487 points, has pulled back slightly from its December all-time high but remains in a long-term uptrend.
• Testing the upper Bollinger Band at 43,535 points, the index shows strong momentum, as indicated by a positive MACD crossover and an RSI of 56.
• Near-term support levels are at 42,000 and 42,700 at the 20-day moving average, presenting opportunities for accumulation.
• Forecasts suggest US indices, including the S&P 500, may achieve low double-digit gains in 2025, with the Dow potentially retesting its 45,000 all-time high.

S&P 500 Technical Analysis

• The S&P 500 is recovering after a recent pullback caused by concerns over strong nonfarm payroll data and the potential for sustained high interest rates.
• After finding strong support at 5,830 points, the index rebounded, driven by strong earnings reports from major U.S. banks.
• Resistance is at the psychological 6,000 level, with the upper Bollinger Band at 6,046 points and an all-time high target near 6,100 points in the short term.
• MACD crossover and positive readings, alongside an RSI at 55 points are suggesting growing momentum especially if the RSI surpasses 60 points.

Read also: What's next for the S&P 500: More upside ahead?

Nasdaq Composite Technical Analysis

• The NASDAQ Composite Index has been trading around the 20-day moving average, closing near the 19,600 points level.
• Support level are at the 50-day exponential moving average at approximately 19,300 points, followed by the lower Bollinger Band around 19,000 points.
• A strong support zone exists near 19,000, and if broken, the 100-day exponential moving average at 18,800 points could act as further support.
• Indicators suggest a potential uptrend, with the MACD line likely to cross above the signal line this week, signaling positive momentum.
• The RSI is at 53, indicating that if it rises above 60, momentum could build, suggesting a potential rebound to retest the previous all-time high.

34:00 - Questions and Answers 

Q: How should investors position themselves in terms of thematic, such as AI and quantum computing?

• Thematic investing, such as focusing on AI or quantum computing, remains crucial.
• Practice second-order thinking when considering thematic investments.
• Investors should not only focus on AI itself but also explore related themes such as cybersecurity and data processing companies.

Q: Is it actually the time to bottom fish in the Chinese market now?

• While the Chinese market has been undervalued, it's crucial to be cautious and avoid trying to time the market.
• Investors can consider testing the waters with small investments rather than going all-in into the Chinese market. 

Q: What are your thoughts on the Singapore Market, are there going to be more upside ahead? 

• Bullish outlook for the STI after surpassing its 2018 highs in last year.
• Key events to look out for include the political sensitivity between China and the U.S. and also the Singapore general elections.

What to look out for this week

• Monday, 20 Jan: US presidential inauguration day
• Tuesday, 21 Jan: Mapletree Logistics Trust earnings
• Wednesday, 22 Jan: Frasers Centrepoint Trust, Mapletree Industrial Trust earnings
• Thursday, 23 Jan: Mapletree Pan Asia Commercial Trust, OUE REIT, Suntec REIT earnings
• Friday, 24 Jan: Keppel DC REIT earnings

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

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