Singapore 2023 budget: winners and losers

$Grab Holdings (GRAB.US)$
Prime Minister Wang Guanyi made a speech on Singapore's fiscal year 2023 budget. The budget predicts a slight deficit of 0.1% of the Gross Domestic Product, considering the expected slow economic growth of 0.5-2.5%. For households, the focus of the policy is to offset the impact of the increase in Goods and Services Tax and inflation, increase housing support, and improve labor skills. In terms of businesses, the medium-term focus is on attracting high-end research and development and intellectual property development.

Here are some direct impacts I can identify on SG-listed companies:

Suitable for retail, mixed-use for developers
In the real estate sector, the budget's impact is mixed. Due to the addition of 3 billion new dollars in insurance plans, the retail trade is expected to experience a short-term boost. The plan provides cash payments to help alleviate the cost of living pressures and the increase in Goods and Services Tax. The main beneficiaries include CICT, FCT, and MPACT.

For developers, the Buyer's Stamp Duty (BSD) for properties valued between 1.5 million and 3 million new dollars and properties valued over 3 million new dollars has increased from 4% to 5% and 6% respectively. This is controllable. For properties valued between 3 million and 5 million dollars, the Buyer's Stamp Duty is 0.5-1.0% of the property value. The negative impact of this increase is offset by a housing grant of 0.1-0.03 million new dollars for first-time buyers of HDB resale properties, which supports resale prices and enhances the ability of HDB upgraders to move into private apartments. Overall, due to the impact of rising mortgage rates, it is projected that property prices will fall by 3-5% in the next 12-18 months.

Unfavorable for platform companies like Grab
Platform workers under the age of 30 at the time of the change will be required to contribute to the Central Provident Fund, and platform companies will also be required to contribute to the fund for these workers. Delivery platforms may be most affected by the Central Provident Fund contributions, as approximately 30% of delivery drivers are under the age of 30.

Regulations regarding platform workers may have a significant impact on companies like Grab, especially if GMV does not undergo cost shifting or increase. Please pay attention to the profits of these relevant companies in the next two years!

Singapore banks are experiencing mixed feelings.
Support for HDB buyers may drive transactions in this sector, potentially affecting entry-level private housing. This could benefit DBS Bank and OCBC Bank, as these banks typically have a higher market share in the small mortgage loan segment. On the other hand, if multinational enterprises are treated as foreign companies, the introduction of a 15% minimum corporate income tax on multinational enterprises starting from 2025 may have a negative impact on the earnings of OCBC and DBS Bank.

Overall, this budget appears to be more favorable to young families, providing more assistance in achieving housing aspirations and offering more support for parents. The budget also includes policies to help Singaporeans cope with urgent inflation issues while continuing to focus on wealth distribution and taxing the wealthy. Remember to watch out for the mentioned three sectors!