Macro Insights: Singapore’s balanced 2023 budget – which sectors and stocks could see an impact? Macro Insights: Singapore’s balanced 2023 budget – which sectors and stocks could see an impact? Macro Insights: Singapore’s balanced 2023 budget – which sectors and stocks could see an impact?

Macro Insights: Singapore’s balanced 2023 budget – which sectors and stocks could see an impact?

Macro 4 minutes to read
Charu Chanana

Head of FX Strategy

Summary:  Singapore’s 2023 budget announcement encompassed more support measures to fight price pressures but also brought back a focus on long-term goals of innovation and productivity. This means retail stocks and REITs could benefit, as could companies with high R&D. Higher taxes for the wealthy may do little to dampen demand and rents could continue to run higher. SGD could come under more pressure as the greenback remains in favor.


Singapore announced the 2023 budget on 14 February, aiming to narrow the deficit to 0.1% of GDP in the year starting April from a revised 0.3% deficit this year. Revenues are expected to get a lift from the increase in GST and higher taxes on high-value property as well as increased taxes for multinational companies, while the expenditure will be lowered as Covid-era stimulus measures are relaxed.

Still, focus remained on supporting Singaporeans amid a high inflation environment and the increase in GST. Subsidies for low-income families increased by S$3 billion but the budget also brought back a long term focus with measures to enhance competitiveness of companies and supporting family planning.

Let’s assess what this can mean for Singapore stocks:

Consumption focus

Increasing the handouts to citizens by S$3 billion in the year starting April will support private demand despite high inflation pressures. This could be positive for value grocers like Sheng Siong (OV8) and restaurants like Kimly (1D0) or Jumbo Group (42R) . This could in turn benefit retail REITs like Frasers Centrepoint Trust (J69U) or Suntec REIT (T82U) which have a large part of their malls dedicated to food courts and restaurants.

Innovation push

Keeping a long-term focus, Singapore announced measures to promote innovation by topping up the national productivity fund by S$4 billion. Businesses will enjoy tax deductions of up to 400% (previous 250%) of qualifying innovation expenditure under the new Enterprise Innovation Scheme. This brings positives for companies that invest in R&D, for instance AEM Holdings (AWX), Venture (V03), UMS (558), ISDN (I07) and Nanofilm (MZH).

Labor market support

Singapore also announced a focus on developing labor-market intermediaries who can go through industry training and employment facilitation to fast pace job opportunities for Singaporeans. This brings staffing-solutions providers such as HRnetgroup Ltd (CHZ) in focus.

On the flip side, higher CPF contributions would potentially add to manpower costs for companies, and weigh on long-term earnings. But the measure is to be implemented in a progressive manner over 4 years, so the effect will be gradual. On watch will be companies with a high labor cost including ST Engineering (S63) and Singapore Airlines  (C6L). Moreover, higher foreign company taxes could divert some foreign flows away. Singapore intends to set its effective tax rate for multinational enterprises at 15% starting 2025, in line with a global agreement to increase the floor rate.

Property taxes

To boost revenues, Singapore will raise taxes for higher-value properties. Residential properties in excess of S$1.5 million and up to S$3 million will be taxed one percentage point higher at 5%. Properties in excess of S$3 million will be taxed at 6% from 4% earlier. This is a negative for City Developers (C09), UOL (U14), Capitaland Investment Ltd (9CI) and Keppel Corp (BN4). However, the measure appears modest for the wealthy individuals and is unlikely to deter demand.

SGD weakened to test the 50DMA

USDSGD rose higher following the budget announcement to test the 50DMA at 1.3338. Singapore dollar is down over 2% since the highs of early February. A break above opens the door to 1.3400 and 1.3600. Disappointing growth prompted the Monetary Authority to say that cumulative tightening measures could help to slow growth, suggesting further tightening measures will remain cautious. Meanwhile, US inflation remains sticky and the potential for US yields and the US dollar to go higher means more pain could come for the Singapore dollar.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992