By Puah Soon Lim
It is that time of the year where we pay attention to what the Budget will bring to the investor. There are many analysts who scramble to put out research report to try to translate the slew of adjustments to taxes and government scheme into how it will benefit specific industry and individual company.
Here is my attempt at interpreting the three most important things investors need to know about the Budget 2018:
1. Impact on stock market
Do not think that the $700 million bonus is going to affect the price of your stocks in any way. There was quite some analyst who thinks that the baby bonus handout of $700m is going to affect consumer plays like Genting Singapore, Sheng Siong, Dairy Farm International, Jumbo Group, Courts and FJ Benjamin. I am skeptical that it will create much of an impact. Just imagine the $700 m being distributed onto the revenue of these retail consumer play. It is really a drop in the ocean. There are simply too many options that the citizen can spend their handout on. I am going to buy my family a nice chilli crab meal at a coffee shop nearby.
2. Additional 1% Stamp Duty
The additional 1 per cent stamp duty on houses above $1 million is not going to be effective as a cooling measure on the property market. This is one announcement that seems to attract a lot of interest. There is quite a few stock analyst that called for a sell recommendation on property developers like City Developments, UOL Group, and Capitaland. I feel that these are just knee-jerk reaction and longer-term investor should not be too bothered by these noises. This is no doubt that this is a negative measure as far as property developers are concern, but it is unlikely to affect individual buyer of properties. I feel that the biggest impact would be on the cooling of the en-bloc fever that is raging right now.
3. REITs ETFs to enjoy tax transparency
This is something that the industry has lobbied for some years now. Tax transparency treatment for Singapore listed real estate investment trusts (S-REITs) will soon be extended to Exchange Traded Funds (ElTs) invested in these REITs. Taking effect on or after July 1, the tax concessions for Reit ETFs will ensure parity in tax treatments between investing in individual S-Reits and Reit ETFs. This is definitely a positive for income investors and is fantastic news for the growth of the REITs sector. It will further strengthen Singapore's status as a REITs listing hub. Expect more REITs listing coming your way.
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