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.

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