On 18 February 2019, Finance Minister Heng Swee Keat delivered the Singapore Budget 2019 in Parliament. In the largely expansionary budget for the year, the main highlights were the Bicentennial Bonus, details on the Merdeka Generation Package, expansion in the scope of public spending on healthcare via CHAS, and maintaining a high rate of spending on defence.
In this edition of our 4 Stocks This Week column, we can’t look any further than the stocks that will benefit the most from the Singapore Budget 2019.
# 1 ST Engineering (SGX: S63)
During the Singapore Budget 2019, one of the first things Minister Heng spoke about was the need for our country to stay vigilant to the threats around us, including terrorism, cyber attacks and fake news, as well as the addition of digital defence as the 6th pillar in our approach to Total Defence.
On the back of this, Minister Heng announced that close to 30% (or $22.7 billion) of the total expenditure in Budget 2019 will be spent on defence, security and diplomacy.
This focus on defence will no doubt flow down to defence contractors in Singapore, of which ST Engineering is a main supplier. Analysts from many of Singapore’s brokerage firms, including DBS, RHB, CGS-CIMB, also highlighted ST Engineering as a potential winner from the Singapore Budget 2019.
# 2 Raffles Medical Group (SGX: BSL)
Another highlight of the Singapore Budget 2019 was the focus on healthcare via the Merdeka Generation Package, which will see $6.1 billion set aside primarily to go towards easing the healthcare burden on Singaporeans born between 1950 and 1959, as well as the extension of CHAS subsidies at GP clinics.
Under the Merdeka Generation Package, those between 60 and 69 today will enjoy:
- $100 in Passion Silver Card top-ups to participate in healthy lifestyle activities and programmes;
- $1,000 in MediSave top-ups, via $200 top-ups over the next 5 years;
- Additional lifetime subsidies for outpatient care, which includes special CHAS subsidies (higher than CHAS Blue subsidies) when they visit GPs and dentists;
- 25% off their subsidised bills (on top of the prevailing subsidies available) at polyclinics and public Specialist Outpatient Clinics (SOCs);
- Lifetime MediShield Life premium subsidies, starting from 5% of premiums and rising to 10% after they reach 75; and
- Participation incentives of $1,500 to join CareShield Life when it becomes available in 2021
Under the extension of the CHAS benefits:
- coverage for chronic conditions will be extended to all Singaporeans;
- subsidies for CHAS Orange cardholders will be extended to common illnesses. (In the past, only CHAS Blue and Pioneer Generation members received such subsidies); and
- increase in CHAS subsidies for those with complex chronic conditions.
Raffles Medical Group, provides integrated healthcare services, including tertiary hospital, a network of over 80 CHAS-approved GPs and dental clinics, insurance services, Japanese and Traditional Chinese Medicine clinics and a consumer healthcare business.
# 3 SembCorp Industries (SGX: U96)
In the Singapore Budget 2019, Minister Heng also highlighted the importance of URA Master Plan 2019, looking 10 to 15 years into the future.
Apart from ensuring Singaporeans will continue to have housing options, there are also initiatives such as the Home Improvement Programme (HIP) and HIP 2 to upkeep ageing HDB flats, the Neighbourhood Renewal Programme (NRP) to renew and develop HDB housing estates and the Voluntary Early Redevelopment Scheme (VERS).
In addition, Minister Heng touched on creating a sustainable future for Singapore, including major planning initiatives such as rising sea levels on the back of climate change, improving existing infrastructure, imposing carbon tax, launching the Zero Water Masterplan, and other initiatives.
SembCorp Industries, entrenched in the business of urban development and Utilities (as well as Marine via SembCorp Marine), may stand to benefit from its track record of developing sustainable urban developments and providing integrated solutions including, generating power and gas, selling and retailing energy, treating water and waster water, renewables and waste-to-resource management.
# 4 Creative Technology (SGX: C76)
Creative Technology’s CEO Sim Wong Hoo was lauded for his spirit of innovation and entrepreneurship at the Singapore Budget 2019. This comes on the back of winning 14 awards at the 2019 Consumer Electronics Show (CES), one of the largest tech trade shows, in the US.
Besides looking at Creative Technology as a potential investment, the main message Minister Heng was trying to portray was the local spirit of innovation and entrepreneurship. This could also extend to many fledgling companies that may be listed on the Singapore Exchange (SGX) Catalist list rather than Mainboard list.
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.