CFA Society Singapore
SINGAPORE (Feb 19): The recent Budget 2019 has little to no impact on the Straits Times Index (STI) component stocks, apart from ST Engineering which has a low index weight, according to DBS in a Tuesday report.
Other mild potential beneficiaries are SembCorp Marine, domestic staple consumer companies, such as Sheng Siong, as well as healthcare stocks.
In the Budget 2019, finance minister Heng Swee Keat shared more detail on the extension of the Community Health Assist Scheme (CHAS), which was first mentioned at the National Day Rally last year by prime minister Lee Hsien Loong.
Apart from extending CHAS subsidies for the general public at GP clinics, the Merdeka Generation seniors also enjoy additional subsidies.
DBS has a “marginally positive” rating on the local healthcare sector. Analyst Rachel Tan says, “We believe this bodes well for participating CHAS GP and dental clinics with the higher subsidies, especially the extension of subsidies to cover chronic conditions to all Singaporeans, regardless of income.”
Although impact may be limited, Tan believes that GP and dental clinic chains, such as Raffles Medical, Singapore Medical Group, Healthway Medical Group, Health Management International and Q&M Dental Group, could benefit.
“On a strategic perspective, aside from reducing the burden on public polyclinics and medical centres, we believe this could indicate the government’s intention to progressively pass on more treatment (especially day treatment and long-term care treatment) on to the GP clinics' network to reduce its healthcare burden and expenditure in the long term,” adds Tan.
Moreover, DBS says that the property sector is the “space to watch”.
Analyst Derek Tan says, “While there might be potential tweaks to plot ratios or land uses to support the ongoing transformation of the city landscape, we believe that most interesting piece of development will come from the potential plans for the Greater Southern Waterfront region, with the Tanjong Pagar container ports moving out in the coming decade.”
The Urban Redevelopment Authority (URA) is also expected to unveil its Underground Master Plan in a comprehensive look at subterranean spaces to support potential uses and needs.
Local REIT investors will also cheer on the extension of tax concessions for local REITs to Dec 31, 2025, as the sunset clause for the tax exemption on S-REITs distributions will be removed for individuals, while there are no changes to income tax concessions.
On the other hand, DBS has “neutral” ratings on the Offshore Marine, Land Transport and Consumer sectors.
Analyst Janice Chua says, “Looking ahead, the Committee of Supply (COS) by the various ministries would be of interest, where we look forward to more details such as the URA Master Plan 2019 on potential plans for Greater Southern Waterfront region, Zero Waste Masterplan on food waste, ewaste and packaging waste (including plastics) and the new Home Team Science & Technology Agency to develop science and technology capabilities.”
Meanwhile, market focus continues to be on a possible US-China trade deal and the 4Q results season. The former could be a “buy in anticipation, sell on news”.
Currently, global stock markets have recovered from their December lows in anticipation of a US-China trade deal and on optimism that the Fed is likely to dial down on rate hike this year.
“With equity markets moving up in anticipation of a US-China trade deal, we certainly do not rule out a ‘sell on news’ once a deal is signed, as investors take profit on recent trades. After the ceremony comes the uncertainty of monitoring both sides’ compliance with the agreements drawn,” says Chua.