- Singapore equities remain constructive but selective. Improving tariff clarity and firmer risk appetite tilt GDP risks to the upside, though we stay cautious.
- A benign inflation backdrop, falling Singapore Overnight Rate Average (SORA) and 10-year yields, and our base case of two US Federal Funds Rate (FFR) cuts (September, December) should lift demand for S-REITs (prefer industrial; see value in office), and sustainable high-dividend equities.
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RHB's house view on Singapore macro:
- We keep 2025 GDP growth at 2% with upside toward 3% on improving tariff clarity, firmer risk appetite, and resilient year-to-date growth, but stay cautious given pending US-China tariff outcomes, US trade policy uncertainties, and likely 2H25 exports slowdown post 1H25 frontloading. Manufacturing should moderate, yielding ~2% 2025 growth (1H25: 4.8% y-o-y).
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RHB's house view on Fed Rate:
- The latest Federal Open Market Committee minutes signal an inflation-first stance: Most participants note that “a majority of participants judged the upside risk to inflation as the greater of these two risks (against unemployment)”. At the same time, fewer emphasised “downside risk to employment (as) the more salient risk.”
- RHB has kept the base case of two 25bps cuts to FFR, but risks are now skew toward a shallower path, one or even no additional cut in 2H25.
Constructive on S-REITs and high-yield equities.
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