Will Budget 2023 lead to a stock market rally?

Finance Minister Lawrence Wong has called the

upcoming Feb 14 Budget

a “Valentine’s Day present” to Singaporeans. How apt, since many analysts expect to hear about measures related to inflation, including buffers for the recent goods and services tax hike and help for lower-income groups.

In general, the sentiment towards Budget 2023 seems to be positive, which is good news for the Straits Times Index (STI). Tracking past trends, the STI closed 0.13 per cent higher in 2021 and 0.2 per cent higher in 2022 after the Budget announcement. But this V-Day, I fear that any “love” coming to the stock market from the Budget announcement will be minimal and short-lived. After all, the areas the Budget tackles will likely be centred on cost-of-living concerns, compared with previous years with their focus on economic stimulus. We must also expect spillover effects from a rough 2022 in the first half of the year.