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Singapore Budget 2018: The Singapore-Listed Companies That Could Benefit (Or Be Harmed)

On Monday, Singapore’s Finance Minister, Heng Swee Keat, delivered his much-awaited Budget statement. This year’s Budget was designed to be a “strategic and integrated plan to position Singapore for the future.”

Within the plan are areas that could positively or negatively impact some Singapore-listed companies.

Let’s take a look.

Ageing Population

By 2030, the elderly population will double to 900,000. To meet the increasing demand for healthcare services, the Government will build “six more general and community hospitals, four new polyclinics, and more nursing homes and eldercare centres” over the next five years.

Companies that could benefit: Construction firms such as Lum Chang Holdings Limited (SGX: L19) and OKP Holdings Ltd (SGX: 5CF), steelworks providers like Yongnam Holdings Limited (SGX: AXB) and BRC Asia Limited (SGX: BEC), crane supplier Tiong Woon Corp Holdings Ltd (SGX: BQM) and ready-mixed concrete provider Pan-United Corporation Ltd (SGX: P52). In fact, Pan-United was pointed out by the Finance Minister in his Budget speech as being an innovator.

Companies that would face higher levels of competition: Private hospital providers like IHH Healthcare Bhd (SGX: Q0F) and Raffles Medical Group Ltd (SGX: BSL).

Infrastructure Boom

Singapore needs to spend more over the next 10 years to develop new infrastructure, such as expanding the rail network by over 100km; redeveloping various parts of Singapore such as the Jurong Lake District; and sprucing up old infrastructure such the HDB flats and lifts.

The next 10-plus years will also see a new terminal at Changi Airport (Terminal 5), Tuas Port, and the KL-Singapore High Speed Rail. These developments will “ready ourselves for long-term economic trends”, said Minister Heng.

Companies that could benefit: On top of the companies that could benefit from the aging population theme mentioned earlier, building maintenance and estate upgrading firm ISOTeam Ltd (SGX: 5WF), and Comfortdelgro Corporation Ltd (SGX: C52) – as a leading provider of taxi, bus, and rail services – may get to enjoy positive tailwinds. Singapore Technologies Engineering Ltd (SGX: S63), with its wide range of engineering products and services, could also play a part in the KL-Singapore rail connection.

Overseas companies might also form joint-ventures with local companies to bid for large-scale projects.

Borrowing for Future Needs

The government is contemplating whether to borrow to develop infrastructure. It will also “consider providing guarantees for some of these long-term borrowings for critical national infrastructure” to lower financing costs and make better use of the reserves. Minister Heng added that the government’s “borrowings will also help to develop our bond market”.

Potential knock-on effects: Further development of the financial industry in Singapore. If the new bonds come to pass, ordinary Singaporeans could have new investment vehicles to invest in. Hopefully, in the process of learning about any potential new government-backed bonds, they will become more exposed to other investment vehicles available, such as stocks, real estate investment trusts (REITs), and exchange-traded funds (ETFs).

Companies that could benefit: If the knock-on effects come to fruition, the major listed financial institutions like the three banks and Singapore Exchange Limited (SGX: S68) could benefit.

A Foolish Bottomline

This wraps up the first part of the series but as always, before investing in any of the companies listed above, do look into their past financial performance and balance sheet strength. Some of the investments may take decades to play out. It’s important to know what exactly you are investing in.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Raffles Medical Group Ltd and Singapore Exchange Limited. Motley Fool Singapore contributor Sudhan P owns shares in Raffles Medical Group Ltd, ISOTeam Ltd and Singapore Exchange Limited.