Singapore Budget 2023: Winner and Losers

SirBahamut
2023-02-15
$Grab Holdings(GRAB)$ 

[I saw a similar title in Bloomberg after writing, rest assured my views are different!]

DPM Lawrence Wong delivered his speech for the Singaporean budget for FY2023. The budget forecasts a slight deficit of 0.1% of GDP, taking into account the expected slower economic growth of 0.5-2.5%. For households, policies are focused on offsetting the impact of GST hikes and inflation, increasing housing support, and improving the workforce's skills. For businesses, the focus is on attracting higher-end R&D and intellectual property development in the medium term.

Here are some the immediate impacts I can identify on SG-listed companies:

Good for Retail, Mixed for developers

In the property sector, the impact of the budget is mixed. The retail sector is expected to experience a short-term boost due to the S$3bn increase in the assurance package, which provides cash payouts to help defray the cost-of-living pressures and the increase in GST. Key beneficiaries include CICT, FCT, and MPACT.

For developers, the increase in buyer stamp duties (BSD) to 5% and 6% for properties worth between S$1.5m-S$3m and above S$3m, respectively, from 4%, is manageable, at 0.5-1.0% of the property value for a $3.0-5.0m property. The negative impact of this increase is offset by increased housing grants for first-time buyers of HDB resale properties by S$10-30k, which supports resale HDB prices and enhances HDB upgraders' ability to move into private condominiums. Overall, house prices are expected to decline by 3-5% over the next 12-18 months due to the impact of higher mortgage rates.

Bad for platform companies such as Grab

Those platform workers who are younger than 30 years old at the time of the changes will be required to make CPF contributions, and the platform companies will also need to make CPF contributions for those workers. Delivery platforms may be most affected by the CPF contributions, as around 30% of delivery drivers are below 30 years old.

The regulations regarding platform workers could have a significant impact on companies like Grab, especially if there is no cost pass-through or increase in GMV. Watch out for the margins of these related-companies in the next 2 year!

Mixed for Singapore banks.

The support for HDB buyers may boost transactions in that segment and could also affect entry-level private housing, which could benefit DBS and OCBC since these banks have typically had higher market shares in smaller-ticket mortgages. On the other hand, the introduction of a minimum corporate income tax of 15% for multinational enterprises (MNEs) could potentially have a negative impact on earnings for OCBC and DBS starting in 2025 if they are considered MNEs.

Overall, this budget seems to benefit young family more, with more helps for families to achieve housing aspiration and more support for parents. Budget also has a few policies to help Singaporeans cope with pressing inflationary issues, while continuing to focus on wealth distribution and taxing the rich. Remember to watch out for the above three sectors I mentioned!

@Daily_Discussion @TigerStars 

💰 Stocks to watch today?(29 Mar)
1. What news/movements are worth noting in the market today? Any stocks to watch? 2. What trading opportunities are there? Do you have any plans? 🎁 Make a post here, everyone stands a chance to win Tiger coins!
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Juliaaa11
    2023-02-15
    Juliaaa11
    Not sure if Grab will be able to absorb the additional costs or if they will pass it on to the customers...
  • JoanneSamson
    2023-02-15
    JoanneSamson
    Good article and analysis on various industries, agree with you!
  • Dollydolly
    2023-02-15
    Dollydolly
    glad that there are policies in place to help households cope with inflation and housing costs💪
  • LMSunshine
    2023-02-20
    LMSunshine
    Congrats buddy on your winning post🥳🥳🥳 See told you it wasn’t my name la…Your articles are GREAT🤩😍
  • DouglasMalan
    2023-02-15
    DouglasMalan
    Bullish on DBS and OCBC.
  • DaveLewis
    2023-02-15
    DaveLewis
    am impressed by the positive outlook, keeping my eyes on retail
Leave a comment
33
1