Stock Market Today

Weekly 25 equity strategy: The bumper US non-farm payrolls in May of 172k jobs significantly exceeded market consensus of 85k, with unemployment holding steady at 4.3%, and upward revisions to April’s and March’s numbers, together reinforcing expectations that have shifted away from any Fed rate cuts this year towards a higher-for-longer rates narrative, or even potential rate hikes. Last Wednesday, Broadcom reported strong earnings, with robust AI-driven growth (AI revenue +143% YoY) and earnings beat, but shares declined 12.6% post-results as forward guidance on AI failed to meet sky-high expectations following a sharp rally in AI-related stocks over the past two months. Against this backdrop, AI-related equities have seen strong multi-month gains, and some consolidation or pullback now appears increasingly likely, given stretched expectations.

In Singapore, First REIT’s proposed exit from Indonesia comes at an opportune time, allowing it to fully divest its exposure amid growing concerns over policy credibility under President Prabowo Subianto. Investor sentiment has been weighed down by concerns over the fiscal cost of the nationwide free-meal programme, uncertainty surrounding economic policymaking, and perceived risks to central bank independence. The rupiah has weakened sharply against the US dollar (-7.8% YTD), while the Jakarta Composite Index has been among the world’s worst-performing major equity markets this year (-35% YTD). The possibility of Indonesia being downgraded by MSCI from Emerging Market to Frontier Market status has further weighed on sentiment. We recommend that First REIT unitholders vote in favour of the proposed divestments at the EGM on 23 June.

Darren Chan
Research Manager
darrenchanrx@phillip.com.sg

Singapore stocks ended lower on Friday (Jun 5), tracking a broader decline across regional markets. Local benchmark fell 0.4 per cent, or 17.57 points, to close at 5,049.96. Across the broader market, losers outnumbered gainers 359 to 205, after 1.6 billion securities worth S$1.9 billion changed hands.

U.S. stocks were lower after the close on Friday, as losses in the Technology, Basic Materials and Oil & Gas sectors led shares lower. At the close in NYSE, the Dow Jones Industrial Average fell 1.35%, while the S&P 500 index lost 2.64%, and the NASDAQ Composite index declined 4.18%.

SG

Singtel Singapore has been awarded up to S$28 million by the government to fund a multi-year artificial intelligence programme which seeks to accelerate its capabilities in AI operations.

SIA Engineering has partnered French aerospace giant Safran Aircraft Engines in a US$118 million joint venture (JV) to set up a full-fledged aircraft engine shop in Singapore.

Wee Hur Holdings has entered into Hong Kong’s purpose-built student accommodation (PBSA) market with the 246-bed Starvia by Y Suites on Fortress Hill.

MTQ Distribution Pte. Ltd. (a wholly-owned subsidiary of SGX-listed MTQ Corporation Limited) agreed to sell the entire issued share capital of Premier Estate Private Limited to H3 Engineering Services Pte. Ltd. for S$12 million.

US

Alphabet’s Google has agreed to pay Elon Musk’s SpaceX $920 million a month for computing power as part of a cloud services deal that runs through mid-2029, its second such agreement with an AI competitor in a matter of weeks.

Eli Lilly and Company announced additional positive results today from pivotal Phase 3 trials of its investigational weight loss drug, retatrutide.

Paramount Skydance Corp is prepared to divest some of its children’s television network assets in an effort to secure European Union approval for its $110 billion acquisition of Warner Bros Discovery Inc.

Marvell Technology is set to join the benchmark S&P 500 later this month, S&P Dow Jones Indices said on Friday, after the chipmaker cleared a key profitability hurdle riding an AI-fueled rally.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, The Edge Singapore, PSR

Singapore Banking Monthly – Interest rates finally stabilise

Analyst: Glenn Thum

• Singapore interest rates are showing signs of stabilisation with May’s 3M-SORA up 2bps MoM to 1.07%, the first MoM increase in 2 years, and fell by 124bps YoY, the smallest YoY decline in 13 months. Singapore YoY loan growth the highest since post-COVID (Apr26: +7.9%). Banks have maintained low-to-mid-single-digit guidance. CASA rose 14% YoY, and CASA ratio to deposits is stable at 20.5% (Mar26: 20.6%), the second highest in 41 months and a tailwind for banks, lowering funding costs and cushioning NIM compression.
• Maintain NEUTRAL. MAS’s 14 April tightening of the S$NEER appreciation path remains in force, alongside the Fed’s higher-for-longer stance, with markets pricing in zero US rate cuts for 2026. The rate backdrop is NIM-supportive, with stabilisation expected to extend through 2H26 as deposit repricing flows through. Oil retreated about 20% from its 2026 peak in late May amid optimism over a US-Iran ceasefire and easing pressure from imported inflation, though the conflict remains unresolved and markets remain volatile. That volatility continues to benefit capital markets income and wealth management fees, a meaningful offset to NII headwinds. Banks’ dividend yields remain attractive at 4.5%, with ongoing buybacks improving ROE. We prefer DBS (fixed dividend policy with a 1Q26 guidance upgrade) and OCBC (wealth management growth and excess capital). We raise our target prices for all three banks, DBS: S$67.50 (prev. S$61.00), OCBC: S$24.00 (prev. S$22.00), UOB: S$39.00 (prev. S$37.00), as we lower our risk-free rate and equity-risk premium assumptions on a more stable interest-rate environment.

SG Bonds – Week 24 : SGS yields moved higher WoW

Analyst: Phillip Research Team

• UST yields edged higher WoW, as market is now fully priced in for a Federal Reserve interest-rate hike by the end of this year, following resilient economic data in May.
• SGD rates rose over the past week, with front-end SORA OIS rose by 2–4bps WoW, while belly and long end rose by 1-2bps.
• Looking ahead, market consensus expects US inflation to rise to 4.2% next week. Together with resilient labour market conditions, we think the data reinforces the Fed’s higher-for-longer stance and supports keeping rates unchanged in June. Domestically, economic conditions remain stable with no major data surprises. Coupled with steady demand at recent MAS bill auctions, SGS yields are expected to remain range-bound and largely track UST movements.

Thakral Corporation Ltd – Spike in core profits

Recommendation: BUY; TP S$2.56; Last close: S$1.8800; Analyst Darren Chan

• 1Q26 revenue/adjusted PATMI surged 44%/109% YoY to S$109.5mn/S$3.3mn, in line with our expectations and forming 23%/17% of our FY26e forecasts. The first quarter is seasonally weaker. Results excluded S$31.5mn of net unrealised fair value losses from GemLife and The Beauty Tech Group (TBTG), reflecting short-term share price weakness. Adjusted PATMI more than doubled, driven by a 47% YoY increase in lifestyle segment revenue, while segment EBIT jumped 92.7% YoY to S$6.6mn.
• The Group acquired an additional 81.64% stake in the 21-acre mixed-use, healthcare-led development site in Gurugram for S$93.9mn in May 2026, raising its interest to 95.28% and securing strategic control of the project.
• We maintain BUY with an unchanged SOTP-derived TP of S$2.56, applying a 50% conglomerate discount, with no changes to forecasts. Lifestyle segment growth is on track to exceed 25% in FY26e, supported by DJI store rollouts in South Asia and continued expansion of the beauty and fragrance portfolio in Greater China. The Nespresso India business continues scaling across boutiques, online platforms, and hospitality partnerships and is on track to turn profitable in FY27. The Gurugram real estate investment, now with a 95.28% stake and strategic control, also offers meaningful NAV upside potential over the medium term.

Palo Alto Networks Inc – Largest pure-play cybersecurity platform

Recommendation: ACCUMULATE; TP US$320.00; Last close: US$272; Analyst Alif Fahmi

• Cybersecurity is a mission-critical, regulation-driven spend, with the market projected to reach US$240bn by 2026 as rising cyber threats and cloud adoption drive recurring demand, accounting for 12–15% of IT budgets.
• Platformization and AI-native security are expected to drive PANW’s next growth phase, as enterprises consolidate vendors onto integrated platforms, supporting stronger recurring revenue, higher upsell potential, and sustained demand in a cybersecurity market projected to grow from US$30bn in 2025 to US$86bn by 2030.
• We initiate coverage with an ACCUMULATE recommendation and target price of US$320. PANW is well positioned to expand its addressable market toward US$300bn by 2028, leveraging continued acquisition-led expansion and growing adoption of AI-driven platforms such as Prisma AIRS and AgentiX.

ST Engineering Maintains Growth Trajectory with Strong Defence Orderbook and Commercial Aerospace Recovery, BUY Rating at S$13.00 Target

Centurion Corporation Expands into Australian Key Worker Accommodation with BUY Rating and S$1.85 Target Price

NetLink NBN Trust Maintains Steady Cash Flow Despite Rising Costs, Target Price Raised to S$0.96

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