Budget 2025 seen benefiting banks, retail, new energy, AI, underpinning SGX
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Analysts said the range of cash handouts, vouchers and enhanced wage support should bolster local purchasing power.
ST PHOTO: GIN TAY
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SINGAPORE – The Budget unveiled on Feb 18 could boost spending and corporate lending and attract investments in green energy and artificial intelligence that could underpin the local stock market, analysts said.
They added that the range of cash handouts, vouchers and enhanced wage support should bolster local purchasing power and, in turn, lift other segments of the economy, such as the retail sector.
“We believe the household and business supports should keep economic activities strong, while investment into innovation and boosting the equities market would open up new opportunities for growth,” JP Morgan strategists said.
The American bank upgraded Singapore stocks to “overweight” on Feb 19, citing the Government’s market support, high dividend yields and fiscal room to cushion the impact of a global slowdown.
The benchmark Straits Times Index (STI) closed at 3,934.04 on Feb 19, up 8.48 points or 0.22 per cent.
One of the Budget-friendly measures included a 50 per cent corporate income tax rebate,
Tax incentives will also be introduced to encourage Singapore-based companies and fund managers to list here
If these incentives are generous, they may help the stock market, said Mr Vasu Menon, managing director of investment strategy at OCBC.
A $1 billion Private Credit Growth Fund
Singapore’s banks – DBS, OCBC and UOB – could see more business activity and an improvement in asset quality following the new measures, said RHB analyst Shekhar Jaiswal.
Top-ups of various infrastructure funds should boost bank loan growth, added Mr Krishna Guha, an analyst at Maybank Securities.
RHB has a target price of $51.20 for DBS, $16.80 for OCBC and $40.20 for UOB.
Supermarkets and other consumer stocks could benefit from additional household support, said Mr Jayden Vantarakis, head of Asean and Singapore research at Macquarie Capital.
Dairy Farm International (DFI) and Sheng Siong are two listed supermarket retailers here. RHB has a target price of $2 for Sheng Siong and US$2.70 for DFI, which runs Cold Storage, Giant, and 7-Eleven stores.
RHB’s Mr Jaiswal said hawker centres, coffee shops and foodcourts could also benefit from the higher disposable income stemming from the Budget measures.
In July, all Singaporeans aged between 21 and 59 in 2025 will get a one-time $600 handout in the form of SG60 vouchers,
Households will receive $800 in CDC vouchers
As with previous CDC vouchers, half can be used at participating supermarkets, while the other half can be spent at heartland merchants and hawkers.
Up to $760 in U-Save rebates will be available for eligible HDB households, along with higher rates for ComCare Assistance schemes to help households in need.
The handouts include an additional $100 worth of climate vouchers for HDB households and the extension of $400 of climate vouchers for private property households,
Each Singaporean child aged up to 12 in 2025 will receive $500 in LifeSG credits that can be used at online or physical merchants that accept PayNow or Nets QR payments.
The renewable energy sector might reap Budget rewards as well. Sembcorp Industries and City Energy, a unit of Keppel Infrastructure Trust, could benefit as Singapore continues to assess the viability of using hydrogen as a fuel source.
The government plans to attract more high-quality investments to enhance technology and innovation
Companies that could benefit include Frencken Group and Venture Corporation, said RHB senior equity research analyst Alfie Yeo.
The higher cash handouts could also boost Singapore’s retail real estate investment trusts (Reits) in the form of increased business at the tills and, in turn, higher rents for mall landlords.
Bloomberg Intelligence analyst Ken Foong said CapitaLand Integrated Commercial Trust, Frasers Centrepoint, Suntec Real Estate Investment Trust and Mapletree Pan Asia Commercial Trust are among those that stand to gain.
RHB analyst Vijay Natarajan has a buy on Frasers Centrepoint Trust and CapitaLand Integrated Commercial Trust.
Mr Natarajan said industrial trusts like CapitaLand Ascendas Reit stand to gain from the focus on biotech and semiconductor sectors. The Reit has a sizeable presence in the one-north and Science Park areas, and the Budget measures will enhance demand for these assets and provide redevelopment options to unlock value, he added.
AIMS APAC Reit and ESR Reit will also benefit from the increased thrust on the semiconductor industry, which could spur more demand for space for research and development and support services, Mr Natarajan noted.
The Budget also turned its attention to transport and related sectors.
Companies like Singapore Airlines, Sats, SIA Engineering and ST Engineering are seen as benefiting from moves to further develop Singapore as an air hub,
Enhancing bus services and expanding the rail network will be positive for SBS Transit, a subsidiary of ComfortDelGro. SBS Transit is already the largest public bus operator in Singapore and operates two of the six MRT lines and two of the three LRT lines.
In November 2024, a joint venture between SBS Transit and RATP Dev Asia Pacific, a subsidiary of RATP Dev, was appointed the operator of the upcoming Jurong Region MRT line in Singapore.
Contrary to market expectations, there were no property measures announced in Budget 2025, except to increase the supply of HDB flats, noted Mr Vantarakis.
JP Morgan reckoned developers here should benefit, given that no cooling measures were announced.
