What’s better than cost-of-living support for households in the latest Singapore Budget 2024?
Tailwinds and opportunities.
As a Permanent Resident (PR), even though I deservedly qualify for CDC vouchers and cash payments (from a financial standpoint), sadly I will not be getting any due to my current relationship status with Singapore.
Thus, I can only resort to or look at potential investment tailwinds and opportunities that listed Singapore stocks can benefit from.
So here are some of the key budget highlight items and the potential tailwinds for respective stocks.
20 Stocks that Can Benefit from Singapore Budget 2024
| Singapore Stock | Ticker | Reason | Budget Highlight Item |
|---|---|---|---|
| Kimly Ltd | SGX: 1D0 | Use of CDC Vouchers | S$1.9B cost-of-living support for households |
| Sheng Siong Group Ltd | SGX: OV8 | Use of CDC Vouchers | S$1.9B cost-of-living support for households |
| Keppel DC REIT | AJBU | Data Centre | S$1B AI computing capacity investment |
| Mapletree Industrial Trust | ME8U | Data Centre | S$1B AI computing capacity investment |
| CapitaLand Ascendas REIT | A17U | Data Centre | S$1B AI computing capacity investment |
| Digital Core REIT | DCRU | Data Centre | S$1B AI computing capacity investment |
| CapitaLand India Trust | CY6U | Data Centre | S$1B AI computing capacity investment |
| Frencken Group Ltd | E28 | Semiconductor | S$1B AI computing capacity investment |
| UMS Holdings Ltd | 558 | Semiconductor | S$1B AI computing capacity investment |
| AEM Holdings Ltd. | AWX | Semiconductor | S$1B AI computing capacity investment |
| Micro-Mechanics (Holdings) Ltd | 5DD | Semiconductor | S$1B AI computing capacity investment |
| Bukit Sembawang Estates Limited | B61 | Property Developer | Lower ABSDs for developers who cannot sell out |
| UOL Group Limited | U14 | Property Developer | Lower ABSDs for developers who cannot sell out |
| City Developments Limited | C09 | Property Developer | Lower ABSDs for developers who cannot sell out |
| DBS Group Holdings Ltd | D05 | Bank | Lower ABSDs for developers who cannot sell out |
| United Overseas Bank Ltd | U11 | Bank | Lower ABSDs for developers who cannot sell out |
| Oversea-Chinese Banking Corporation Ltd | O39 | Bank | Lower ABSDs for developers who cannot sell out |
| Sembcorp Industries Ltd | U96 | Infrastructure | S$5B Future Energy Fund & Tax Credit |
| Keppel Ltd | BN4 | Infrastructure | S$5B Future Energy Fund & Tax Credit |
| Wong Fong Industries Ltd | 1A1 | CET sector | SkillsFuture Credits |
a) S$1.9 billion in cost-of-living support for households
The headline grabber.
Due to higher living costs, the government has announced a further S$1.9 billion enhancement to the GST Assurance Package.
This aid comes in the form of an extra S$600 Community Development Council Vouchers for all Singaporean households and a means-tested cash payment of S$200 to S$400 for eligible Singaporeans.
S$600 + S$200 is easily my 1-month food and grocery expenses sia.
Even though I have no experience with CDC vouchers, seeing eligible recipients knock off their purchases with bestowed credits at the hawkers and supermarkets is reassuring as it means they do not need to fork out any hard-earned money.
Times are tough, and most families looking for tighter cost expenses while utilizing these financial aids would dine in affordable eateries or cook more at home.
Companies like Kimly Ltd (SGX: 1D0), a listed chain hawker/coffeeshop, and Sheng Siong Group Ltd (SGX: OV8), Singapore’s third-largest supermarket, are two names that can benefit from this budget update.
b) More than S$1 billion will be invested in AI computing capacity
You know the AI bandwagon is real when the Singapore government wants to invest a whopping S$ 1 billion over the next 5 years.
It’s been nearly 1 year since the launch of ChatGPT, and other AI-related offerings have mushroomed.
Credits to the Singapore government, who I’ve observed to be very early adopters tapping into the potential.
While there are multiple AI-related companies raising capital and counting Singapore as their home ground, these companies are not readily available as investments to the mass public.
Even though there are no notable pure-play AI companies listed on the SGX, investors can still think out of the box and look at the semiconductor industry and data center REITs.
These are crucial infrastructures that AI will require.
More and more S-REITs are pivoting to become Data Center-centric. We started with only just pure-play Keppel DC REIT (SGX: AJBU), but now have Mapletree Industrial Trust (SGX: ME8U), CapitaLand Ascendas REIT (SGX: A17U), and Digital Core REIT (SGX: DCRU). CapitaLand India Trust (SGX: CY6U) is the latest one to join the data center cohort as well.
As for semiconductor stocks, we can count on the likes of Frencken Group Ltd (SGX: E28), UMS Holdings Ltd (SGX: 558), AEM Holdings Ltd. (SGX: AWX), and Micro-Mechanics (Holdings) Ltd (SGX: 5DD).
c) Lower ABSDs for developers who cannot sell out
It would be a queer budget if the subject of property is not mentioned.
Before 16 Feb 2024, housing developers were granted an Additional Buyer’s Stamp Duty (ABSD) remission if they sold all units in their development within a 5-year timeline.
However, should they be unable to do so, they would be subject to an ABSD clawback rate amounting to 25-35% of the land purchase price with interest.
Under Budget 2024, from 16 Feb 2024, the ABSD clawback rate would be lowered in reductions of 1% for each additional percentage (%) of total units sold above 90%, once developers sell at least 90% of a development within the prescribed sale timeline.
This might not seem like a big deal, but when looking at the bigger picture with rates scheduled to be tapered down, would alleviate the local property developers. Expected increases in property sales could create a win-win situation for property developers
Property development stocks like Bukit Sembawang Estates Limited (SGX: B61), UOL Group Limited (SGX: U14), and City Developments Limited (SGX: C09) are among the burgeoning lists of property developers that could stand to benefit.
And while you are at that, please don’t forget Singapore’s Terrific Trio – DBS Group Holdings Ltd (SGX: D05), United Overseas Bank Ltd (SGX: U11) and Oversea-Chinese Banking Corporation Ltd (SGX: O39).
d) S$5 Billion Future Energy Fund & Tax Credit
Looks like Bing Image creator got the memo after I prompted “Singapore Renewable Energy”.
Another highlight of the budget is none other than the whopping S$ 5 billion Future Energy Fund. Infrastructure businesses used to be boring, but they might take a twist and I have changed my perception after learning to appreciate Berkshire Hathaway Inc.’s (NYSE: BRK.B) business model.
While Singapore’s industrial and energy infrastructure business faces the risk of fluctuating energy sales and feedstock prices, the incentive to pivot and be involved in the clean and sustainable energy transition would surely benefit.
Companies likes Sembcorp Industries Ltd (SGX: U96) and Keppel Ltd (SGX: BN4) who have an existing footprint in this sector, are poised to benefit.
e) Upskilling with SkillsFuture
Yeah, even SkillsFuture can create tailwinds.
SkillsFuture, the go-to upskilling initiative that has changed careers and lives for the better, is getting another boost in the latest Budget 2024.
In the Budget, DPM Lawrence Wong announced a new SkillsFuture Level-Up program, which includes a $4,000 SkillsFuture Credit top-up for all Singaporeans aged 40 and above.
Though this might seem niche, surprisingly there is an SGX-listed company – Wong Fong Industries Ltd (SGX: 1A1) that specializes in Singapore’s Continuing Education and Training (CET) sector.
Although it is not the only company that stands to benefit from SkillsFuture, a snapshot of Singapore’s demographics by age shows how much potential there is.
Budgeting your portfolio and beyond 2024
As a Malaysian Singapore PR, looking at both Malaysia and Singapore’s annual budgets, I can always tell how one budget is more robust and forward-looking compared to the other.
At least geopolitical-wise, Singapore’s government is much stable with few to no U-turns and backtracks.
That said, buying 20 stocks that could benefit from Budget 2024 can be out of the budget for most of us, be it from a monetary perspective or having the time to deep dive.
I see the Singapore Budget 2024 more from a perspective of identifying tailwinds – where great businesses are poised to benefit more, rather than relying on mediocre businesses catching the wind for one-off earnings.
Depending on your investment methods and strategies, you might want to scrutinize and pick those mentioned stocks as candidates for your watchlist!