SINGAPORE - Unlike 2023’s Budget focusing more on wealth redistribution, Singapore’s Budget 2024 has an investment tilt that lifts market sentiment.
The Straits Times Index (STI) stayed in positive territory throughout the trading session on Feb 16, including during the Budget speech by Finance Minister Lawrence Wong.
While expansionary, Budget 2024 is geared towards incentivising investments in green transition, human capital, critical infrastructure and high quality foreign direct investment.
Maybank Securities and RHB said some 13 STI constituents across six sectors are expected to benefit from the Budget.
1. Financial institutions
The trio of local banks could benefit from lower asset quality risks, given the enhanced support schemes and fiscal transfers for businesses and households facing rising cost pressures.
The Budget also positively impacts loan growth and issuance of debt securities through the refundable tax credit scheme and $5 billion Future Energy Fund.
Funding related to artificial intelligence should also help banks to grow AI-enabled revenue streams and cash savings, furthering their capabilities.
Additionally, banks and the Singapore Exchange can potentially benefit from top-ups to the Financial Sector Development Fund.
Maybank analysts Chua Hak Bin and Brian Lee said: “This should help banks in energy transition and grow revenues along with fintech partners.”
2. Property developers
The Budget will be marginally positive for property developers such as UOL Group and City Developments (CDL).
The lower additional buyer’s stamp duty claw-back rate on achieving at least 90 per cent of sales within five years of the land acquisition should give them more flexibility on achieving full sales.
RHB chose CDL as its top pick despite further moderation in property prices in 2024, given the developer’s diverse landbank and limited inventory risks.
3. Real estate investment trusts (Reits)
Reits with a focus on a suburban retail portfolio such as CapitaLand Integrated Commercial Trust should benefit from various cash handouts and income tax rebates that boost consumer spending.
Industrial landlords like CapitaLand Ascendas Reit and Mapletree Industrial Trust with high-tech focused spaces and data centres are also likely to benefit in the medium term, with higher research and development (R&D) related tax rebates and potential collaborations with AI companies, said Maybank’s Dr Chua and Mr Lee.
4. Industrials
The Future Energy Fund and tax credit to support green transition activities are set to benefit companies involved in energy transition and sustainable infrastructure development incrementally.
These include local energy players such as Sembcorp Industries and Keppel, said Maybank.
Meanwhile, RHB analyst Shekhar Jaiswal highlighted the Government’s commitment to maintain strong defence and cyber security, with the Ministry of Defence remaining the top ministry by expenditure in Budget 2024.
ST Engineering, which has a “sizeable exposure to Singapore and global defence spending” and “strong capabilities in cyber security”, is set to benefit from this, said Mr Jaiswal.
5. Telco
With enhanced support for R&D and AI development, as well as a nationwide broadband upgrade, technology, media, and telco players such as Singtel will have some of their R&D expenses offset, Maybank said.
RHB’s Mr Jaiswal added that the significant improvement in broadband speed should also spur the development of new AI-driven solutions, with telcos morphing into “techcos”.
“Singtel is our top pick, being a regional sector bellwether and a core telco portfolio constituent,” he said.
6. Technology
Similar to their telco peers, technology companies such as Venture Corporation are likely to benefit from higher tax rebates as they conduct most of their R&D activities in Singapore while manufacturing is done overseas.
The AI boom is also expected to bring more partnerships and customers for these companies, said Maybank’s Dr Chua and Mr Lee. THE BUSINESS TIMES
