Singapore Budget 2023: Winners and Losers

$Grab Holdings(GRAB.US)$
Prime Minister Wang Guanyi delivered a speech on Singapore's 2023 budget. The budget forecasts a slight deficit of 0.1% of GDP, taking into account the expected slower economic growth of 0.5-2.5%. For families, policies focus on offsetting the effects of rising goods and services taxes and inflation, increasing housing support, and improving the skills of the workforce. As far as business is concerned, the medium-term focus is on attracting high-end R&D and intellectual property development.

Here are some of the direct effects I can identify on SG listed companies:

Suitable for retail, hybrid for developers
In the real estate industry, the impact of the budget is mixed. The retail sector is expected to experience a short-term boost due to an increase of S$3 billion in insurance plans. The plan provides cash outlays to help cover cost of living pressures and increases in goods and services taxes. Key beneficiaries include CICT, FCT, and MPACT.

For developers, the buyer's stamp duty (BSD) for properties worth between S$1.5 million and S$3 million or more was raised from 4% to 5% and 6%, respectively. This is manageable. For properties worth between $3 million and $5 million, the buyer's stamp duty is 0.5-1.0% of the value of the property. The negative impact of this increase was offset by an increase of S$100,000 to $30,000 in housing allowances for first-time HDB resale property purchases, which supported HDB's resale price and enhanced the ability of HDB upgraders to move into private apartments. Overall, house prices are expected to fall by 3-5% over the next 12-18 months due to rising mortgage interest rates.

Bad for platform companies like Grab
Platform workers under the age of 30 at the time of the change will be required to pay the Provident Fund, and the platform company will also be required to pay the Provident Fund for these workers. Delivery platforms are likely to be most affected by Central Provident Fund contributions, as around 30% of delivery drivers are under the age of 30.

Regulations on platform workers could have a significant impact on companies like Grab, especially if GMV doesn't pass on or increase costs. Keep an eye on the profits of these related companies for the next two years!

The Bank of Singapore had mixed feelings.
Support for HDB buyers is likely to drive transactions in this sector and may also affect entry-level private housing, which may benefit DBS and OCBC, as these banks generally have a higher market share in the microfinance sector. On the other hand, if a multinational enterprise is considered a multinational company, the introduction of a 15% minimum corporate income tax for multinational companies may have a negative impact on the earnings of OCBC and DBS starting in 2025.

Overall, the budget seems to be more beneficial to young families, more helpful for families to achieve their housing wishes, and more support for parents. The budget also has policies to help Singaporeans deal with pressing inflation issues while continuing to focus on wealth distribution and taxation of the rich. Remember to watch out for the three sections I mentioned above!