DBS marks 6 takeaways in Budget 2025

The group identified segments that will benefit from the budget’s key priorities.

DBS revealed its six key takeaways after Singapore announced the priorities for this year’s Budget 2025.

The government budgeted a second consecutive overall fiscal surplus of $6.8bn (0.9% of GDP) in FY2025, despite significant spending priorities. The FY2025 surplus is supported by a higher Net Investment Returns Contribution (NIRC) of 3.6% of GDP, the highest since FY2020 (3.7% of GDP). FY2025’s overall figure was close to FY2024’s better-than-expected and revised SGD6.4bn overall surplus (0.9% of GDP).

DBS said that grocers and retail malls are the biggest beneficiaries of the SG60 package, CDC vouchers, and other handouts.

The bank said that the vouchers will provide $1.1b in grocery support which will drive a switch from cash to vouchers whilst significantly boosting supermarket sales volumes and overall industry growth. DBS estimates a total of $1.7b in CDC/SG60 vouchers could be used for groceries.

Additionally, the CDC and SG60 vouchers will lift retail-related spending, particularly on essentials at suburban retail malls. Supermarkets, food court operators, and, to a lesser extent, F&B operators in shopping malls will also benefit.

Meanwhile, technology and semiconductor stocks will benefit from a $3b top-up to the National Productivity Fund. The proposed $1b national semiconductor R&D fabrication facility provides industry-grade tools for researchers and industry partners to prototype and test new innovations which will further enhance Singapore's attractiveness in the semiconductor sector.

DBS added that while Singapore's semiconductor industry excels in advanced nodes (7nm and above), mature nodes continue to play a significant role. The most promising areas are integrated device manufacturers (IDMs) and high-end outsourced assembly and test (OSAT) services, with AEM Holdings having exposure to the latter.

Other tech stocks like Venture, Grand Venture, and Frencken are poised to benefit from the $3b top-up to the National Productivity Fund, given their exposure to the life sciences and medical segments.

The $5b top-up to Future Energy Fund and emphasis on renewable energy will open new opportunities for utility/infrastructure companies.

DBS said that this is crucial for Singapore’s decarbonisation initiatives for the power industry, which include decarbonising gas-fired power plants (>90% of current electricity supply) with green hydrogen fuel and increasing the percentage of renewable energy in the energy mix to onethird by 2035.

Singapore aims to achieve c.2GW of its own solar capacity by 2025 and import up to 6GW of renewable energy from neighbouring countries – MOUs have already been signed with Indonesia, Cambodia, and Vietnam (totalling up to 5.6GW). The fund could be utilised to support imports of low-carbon electricity and green hydrogen as well as potential nuclear power development, which require major investment in new infrastructure, such as cross-border pipelines or interconnectors.

Tax incentives that the government announced will also encourage more listings on the SGX.

Additionally, tax incentives for fund managers investing substantially in Singapore-listed equities could attract greater institutional capital, boost trading volumes on the SGX, and increase demand for a broader range of financial products, further strengthening the SGX’s position as a leading multi-asset exchange.

Meanwhile, DBS views the government guarantee and $5b top-up to the Changi Airport Development Fund to have a limited impact on the borrowing costs for Changi Airport Group. DBS also said it is unlikely that improvements in CAG's funding costs would translate into a more measured pace of airport fee hikes given current conditions.

Finally, the slew of measures to encourage higher birthrate like the $5,000 increase in the Child Development Account, $5,000 in Medisave grants to the mother's Medisave account, $1,000 in LifeSG credits, and lower fee caps at government-supported preschools will unlikely to move the needle for healthcare companies.