Investment Rating - The industry investment rating is In-Line for both HK and ASEAN financials, with a preference for high total shareholder return (TSR) stocks in Singapore and Hong Kong [6][4]. Core Insights - The macroeconomic environment is expected to dominate discussions in the second half of the year, particularly regarding the impact of interest rates and potential tariffs on China and Hong Kong, as well as supply chain relocations into ASEAN [2][3]. - Singapore banks are anticipated to perform well, potentially benefiting from a lower cost of equity if revitalization measures for Singapore's equity market are implemented [2]. - Defensive stocks are favored in the current climate, with UOB being the most preferred bank in Singapore, while HSBC and Standard Chartered are expected to perform well due to dividends, share buybacks, and high return on equity (RoE) [2][4]. Summary by Sections Singapore and Hong Kong Financials - Preferred stocks include SGX, UOB, HSBC, and Standard Chartered, while Hang Seng and BoCHK are least preferred [4]. - Target prices for preferred stocks are set at 15.90 for SGX, 90.00 HKD for UOB, and 121.50 HKD for HSBC, with current prices showing slight upside potential for SGX and UOB, but downside for HSBC [8]. - The average daily traded value for UOB is 199 million USD, indicating strong liquidity [8]. Emerging Markets (EM) ASEAN - The report indicates a less favorable outlook for EM in the near term, particularly for Indonesia, where economic risks and lower commodity prices are expected to limit loan growth [3]. - The Philippines is highlighted as a preferred EM, benefiting from resilient RoE and increased retail lending penetration, with BDO and BPI being the preferred banks [3][9]. - Target prices for preferred EM banks include 10,017.00 for BCA and 8,625.00 for BRI, with current prices showing significant upside potential [9]. Financial Metrics - The report estimates a 2025 RoE of 33.3% for Singapore banks, with a target price-to-earnings ratio (PER) of 33.1 for SGX [8]. - Malaysian banks are expected to show defensive characteristics, but with stretched valuations compared to Singapore banks [2][3]. - The estimated dividend yield on target prices for preferred banks ranges from 2.3% for SGX to 6.0% for UOB in 2026 [9].