OCBC and ST Engineering 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 ST Engineering.

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

Weekly Market Review

1:52 - Macro Update

• Global markets saw declines last week, with the S&P 500 down 2.6%, NASDAQ dropping 3.5%, and the STI pulling back 0.9% to below 3,900.
• The weakness was driven by falling consumer confidence and retail sales in the U.S., with the Conference Board Consumer Confidence Index dropping sharply below 100 points.
• Concerns over high inflation and potential tariff impacts further dampened sentiment.
• Meanwhile, NVIDIA’s earnings exceeded expectations, with Q4 revenue up 78% to $39.3 billion and EPS at $0.89, but the stock still declined due to concerns over sustaining growth momentum
• While data center revenue surged 93%, gaming revenue slightly declined due to timing issues, with management expecting a rebound in 2026.
• Despite a positive revenue forecast of $43 billion for Q1 FY26, NVIDIA’s stock price fell as it did not meet the highest market expectations.

5:37 Singapore market updates

STI Top performers:

• ST Engineering
• UOL
• Sembcorp Industries
• SGX
• CapitaLand Investment
• 

STI worst performers:

• Yangzijiang Shipbuilding
• Seatrium
• SATS
• Jardine Matheson
• OCBC

6:20 - OCBC

• OCBC reported a 4% increase in net profit for Q4 2024, driven by total income growth but offset by rising expenses.
• Net interest margin continued its decline, reaching 2.15% in Q4 from 2.29% a year earlier.
• Fee income grew, particularly in wealth management, which contributed $246 million.
• Operating expenses surged due to higher staff costs, pushing the cost-to-income ratio to 39.7% in FY24 from 38.7% in FY23.
• OCBC declared a final dividend of 41 cents, slightly down from 42 cents in FY23, but added a special dividend of 16 cents, bringing the total payout ratio to 60%.
• Additionally, a $2.5 billion capital distribution plan, including share buybacks, was announced for FY24-25.
• Looking ahead to 2025, net interest margin is expected to decline to around 2%, with a higher cost-to-income ratio in the low 40s.
• OCBC’s valuation stands at 10x PE, slightly above the historical average, while its price-to-book ratio of 1.3x reflects its improved ROE.

Read also: OCBC profit rises by 4% and announces special dividend: Our Quick Take

Related Links:

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

11:09 - ST Engineering

• ST Engineering's share price hit an all-time high following strong full-year results, with revenue growing more than 10% and net profit rising 20% year-on-year in  2024.
• Its three key divisions—commercial aerospace, defense, and public security—saw solid growth, with aerospace revenue increasing 5% to $2.15 billion and defense/public security rising 20% to $2.6 billion.
• Growth was driven by higher aircraft maintenance work due to increased global air travel and stronger demand for defense and public security equipment.
• The company’s order book expanded to $28.5 billion, up from $27.4 billion in December 2023, ensuring future revenue streams.
• ST Engineering raised its final dividend to 5 cents per share, bringing total dividends for 2024 to 17 cents reflecting confidence in earnings sustainability.
• Despite share price at all-time high, strong earnings growth has kept P/E close to its historical average
• The dividend yield stands at 3.7%, slightly below the historical average of 4%.

Related Links:

• ST Engineering share price history and share price target
• ST Engineering dividend history and dividend forecasts

19:00 - Technical Analysis

Dow Jones Technical Analysis

• The Dow Jones Index has recently pulled back but seems to have bottomed out, holding steady at the 100-day EMA around 43,285 points, coinciding with the lower bound of the Bollinger Bands.
• This technical support attracted buyers, leading to a rebound on Friday, with the index briefly testing the 50-day EMA at 43,838 points.
• Moving forward, the Dow is expected to trade within a range between 43,300 and 45,000 points.
• Positive signs from the MACD indicate that the downtrend has slowed, and the RSI, nearing the 50 neutral mark, could signal a continuation of the uptrend if it crosses above 50.
• If confirmed by these indicators, a rebound toward the 45,000 handle is anticipated in the coming weeks.

S&P 500 Technical Analysis

• The S&P 500 recently hit new all-time highs but has pulled back due to profit-taking and market weakness in late February.
• The index tested the 100-day EMA at 5,918 points, with the next potential support at the 5,773-5,800 range, near its year-to-date low from January.
• The 50-day EMA, previously tested in late February, remains a resistance level.
• The MACD shows a smaller negative reading, signaling that the downtrend may be subsiding, while the RSI is still weak at 44.
• The S&P 500 is expected to consolidate between 5,800 and 5,900 points, with potential to range up to 6,100 points, depending on market catalysts like the upcoming non-farm payroll report.
• A recovery to previous highs may take some time.

Nasdaq Composite Technical Analysis

• The NASDAQ Composite Index saw a significant drop of nearly 4% in February, testing the 50-day EMA and breaking below the 100-day EMA due to negative news and underwhelming NVIDIA results.
• It is now approaching the 200-day EMA at 18,320 points, which is a key long-term support level, triggering a technical rebound.
• The index also dipped below the lower bound of the Bollinger Band, prompting technical traders to enter with a mean reversion strategy.
• Indicators show that the negative momentum is subsiding, with the RSI breaching the oversold level at 30, signaling a potential bottoming out.
• The expected range for the NASDAQ is between Bollinger Band support at 18,739 and 20-day moving average at 19,551, with the possibility of a rebound towards 20,200 points or higher.

What to look out for this week

• Monday, 3 Mar: Singapore Savings Bonds applications open
• Friday, 7 Mar: US employment data

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