The Federal Reserve finally reduced interest rates on 17 September 2025. With more rate cuts ahead, investors might expect all stocks to appreciate. However, not all stocks benefit equally from lower rates; some businesses face margin pressure or lower earnings in a lower-rate world. Here, we showcase three Singapore stocks that could come under pressure: Oversea-Chinese Banking Corporation Ltd (OCBC), Great Eastern Holdings (GE), and Singapore Airlines (SIA).OCBC: Lower Interest Earnings Outweigh Loan Grow ...

Group 1 - The core inflation expectations have been raised, maintaining hopes for the normalization of the Bank of Japan's policies [1] - The market will closely monitor Governor Ueda's press conference for any hints regarding the timing of the next interest rate hike [1]

Core Viewpoint - Oversea-Chinese Banking Corporation Limited (OVCHY) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based on changes in earnings estimates, tracking EPS estimates from sell-side analysts through a consensus measure known as the Zacks Consensus Estimate [2]. - The recent upgrade reflects an improvement in the company's earnings outlook, which is expected to lead to increased buying pressure and a rise in stock price [4][6]. Impact of Earnings Estimate Revisions - There is a strong correlation between earnings estimate revisions and near-term stock price movements, making it beneficial for investors to track these revisions [7]. - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. Current Earnings Outlook for Oversea-Chinese Banking - For the fiscal year ending December 2025, the company is projected to earn $2.53 per share, with no year-over-year change expected [9]. - Over the past three months, the Zacks Consensus Estimate for Oversea-Chinese Banking has increased by 1.2%, indicating a positive trend in earnings estimates [9]. Zacks Rank System and Market Position - The Zacks rating system maintains a balanced distribution of "buy" and "sell" ratings across over 4,000 stocks, with only the top 20% receiving a "Strong Buy" or "Buy" rating [10][11]. - The upgrade to Zacks Rank 2 places Oversea-Chinese Banking in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [11].

Core Viewpoint - The report from OCBC highlights that despite escalating conflicts between Israel and Iran raising investor concerns, the overall market reaction remains measured without panic [1]. Market Reaction - The conflict marks the first large-scale public engagement between Israel and Iran, leading to worries about potential regional war [1]. - On the last Friday, gold prices increased by 1.5%, while the S&P 500 index saw a slight decline of 1%, indicating a moderate overall drop in the market [1]. Oil Price Concerns - A significant concern for the market is the potential impact of the conflict on oil prices, with oil prices rising sharply last Friday [1]. - There are fears that Iran may target the Strait of Hormuz, a crucial oil passage, with an Iranian commander stating that Tehran is evaluating the possibility of closing the strait [1]. - The Strait of Hormuz is vital, with approximately 20 million barrels of crude oil and petroleum products passing through daily, accounting for about 20% of global oil transport [1]. Analyst Skepticism - Analysts express skepticism regarding Iran's likelihood of closing the Strait of Hormuz, noting that China, which accounts for three-quarters of Iran's oil exports, may oppose such actions [2]. - Iran has previously made similar threats in 2011, 2012, and 2018 but has never followed through [2]. - While Iran may resort to attacking tankers or laying mines in the strait, there are concerns that such actions could provoke a strong response from the U.S. military stationed in Bahrain [2]. Market Outlook - If the conflict does not severely disrupt global oil supplies, market panic may gradually ease [3]. - OCBC advises investors to maintain a long-term perspective during market volatility and to consider increasing allocations in quality stocks and Asian investment-grade bonds to navigate uncertainty and seize potential buying opportunities [3].

Core Viewpoint - Singapore's OCBC Bank suggests that if the situation in Iran escalates into a larger regional conflict, Brent crude oil prices could exceed $100 per barrel and potentially reach $120 per barrel, indicating fragile risk sentiment in the market [1] Group 1: Geopolitical Impact on Oil Prices - The bank highlights the significant role of Iran in the global oil market, noting that additional sanctions on Iran and disruptions in the Strait of Hormuz trade route cannot be overlooked [1] - The ongoing geopolitical tensions present upward risks for oil prices, although the bank anticipates that prices may only be impacted in the short term [1] Group 2: Future Price Predictions - OCBC Bank's current forecast for 2025 indicates average prices of $63 per barrel for West Texas Intermediate (WTI) and $67 per barrel for Brent crude oil [1]

Core Viewpoint - OCBC maintains its expectation of three rate cuts in 2023, each by 25 basis points, but delays the first cut from Q2 to Q3 due to the current economic conditions [1][4]. Inflation Trends - The U.S. Consumer Price Index (CPI) rose by 0.2% month-on-month in April, lower than the expected 0.3%, with the year-on-year increase in overall CPI decreasing from 2.4% to 2.3% [2]. - Housing prices increased by 0.3% month-on-month, contributing to over half of the overall increase, while energy prices rose, offsetting declines in gasoline prices [2]. - Core CPI year-on-year growth remains at 2.8%, indicating persistent inflation in core services, while core goods prices have turned positive with a growth of 0.13% [2]. Labor Market Insights - The labor market shows signs of cooling, with non-farm payrolls increasing by 177,000 in April, which is above market expectations but not robust [3]. - The unemployment rate remains at a cyclical high of 4.2%, and average hourly earnings increased by only 0.2% month-on-month [3]. - The job vacancy rate fell to 4.3%, indicating a gradual easing of labor market tightness, with the job-to-unemployment ratio dropping to 1.02, suggesting potential impacts on unemployment if vacancies continue to decline [3]. Market Expectations - Market concerns about a U.S. recession have significantly eased, with the probability of recession dropping from 65% in early April to 38% currently [4]. - Interest rate futures reflect a cooling of rate cut expectations, with only 54 basis points of cuts priced in for the year, down from over 100 basis points in April [4]. - The expectation for a rate cut at the June FOMC meeting has been fully priced out, with only a 40% chance of a 25 basis point cut in July [4]. Treasury Yield Predictions - OCBC has slightly raised its forecast for U.S. Treasury yields due to the delayed rate cut expectations and improved market sentiment, but maintains a medium-term outlook of moderate decline [5]. - The report emphasizes that while the U.S. economy is not in a full recession, there are clear signs of slowing growth and persistent core inflation [5]. - Future economic data will be closely monitored, particularly regarding labor market conditions and service inflation, which could trigger policy adjustments [5].

Core Viewpoint - The Singapore Overseas Chinese Bank predicts a significant slowdown in the US economic growth to 1.4% for this year, with a projected increase of 2.8% in 2024 [1] Economic Outlook - The bank's investment strategy managing director, Vasu Menon, highlights the uncertainty surrounding Trump's 10% universal tariffs and erratic trade policies, which may impact the US economy and businesses in the coming months [1] - There is considerable economic uncertainty that has weakened confidence in US assets, as indicated by surveys showing a decline in both business and consumer confidence [1] Data Interpretation - Current soft data regarding economic performance raises questions about whether it will translate into significant hard data weakness, potentially leading to an economic recession [1]

Core Viewpoint - Singapore's Oversea-Chinese Banking Corporation (OCBC) indicates that while global risk assets may continue to experience volatility in the short term, opportunities still exist [1] Group 1: Market Conditions - Concerns regarding growth and inflation, along with the unpredictability of Trump's policies, may create market tension [1] - The investment strategy emphasizes an increased allocation to equities, with China identified as a preferred market [1] Group 2: Investment Opportunities - Selective opportunities are present in the U.S. stock market and other Asian markets [1] - Singapore is highlighted as an attractive investment destination due to its low valuations and appealing dividend yields [1]

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting the need for sound fundamentals and positive earnings estimates to maintain momentum in stock prices [1][2]. Group 1: Stock Performance - Oversea-Chinese Banking Corporation Limited (OVCHY) has shown a solid price increase of 8.5% over the past 12 weeks, indicating strong investor interest [4]. - The stock has also increased by 3.7% over the last four weeks, suggesting that the upward trend is still intact [5]. - Currently, OVCHY is trading at 80.5% of its 52-week high-low range, indicating a potential breakout opportunity [5]. Group 2: Fundamental Strength - OVCHY holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for near-term price movements [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term performance [7]. Group 3: Investment Strategy - The article suggests using the "Recent Price Strength" screen to identify stocks like OVCHY that are on an uptrend supported by strong fundamentals [3]. - It also mentions that there are over 45 Zacks Premium Screens available for investors to find stocks that align with their investment strategies [8].

Core Viewpoint - Oversea-Chinese Banking Corporation Limited (OVCHY) has received a Zacks Rank 2 (Buy) upgrade due to an upward trend in earnings estimates, indicating a positive outlook for the company's stock price [1][4]. Earnings Estimates and Rating System - The Zacks rating system is based on changes in a company's earnings picture, tracking EPS estimates from sell-side analysts through a consensus measure known as the Zacks Consensus Estimate [2]. - The Zacks rating upgrade reflects optimism about the earnings outlook for Oversea-Chinese Banking, which could lead to increased buying pressure and a rise in stock price [4][6]. Impact of Earnings Estimate Revisions - Changes in future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors who adjust their valuations based on these estimates [5]. - For Oversea-Chinese Banking, rising earnings estimates signify an improvement in the company's underlying business, which is expected to drive the stock price higher [6]. Earnings Estimate Data - For the fiscal year ending December 2025, Oversea-Chinese Banking is projected to earn $2.53 per share, reflecting a 9.5% increase from the previous year's reported figure [9]. - Over the past three months, the Zacks Consensus Estimate for the company has risen by 5.6%, indicating a positive trend in earnings expectations [9]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [8]. - The upgrade to Zacks Rank 2 places Oversea-Chinese Banking in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [11].