JP Morgan has upgraded Singapore equities to “overweight” among Asean and the Asia ex-Japan region following yesterday’s Budget 2025.
The bank’s equity macro research team says Singapore equities are driven by inexpensive valuation, lower volatility compared to its regional peers, decent expansion in earnings, high dividend yields, government initiatives to revive the domestic stock market, monetary policy easing to cushion the impact of a slowdown led by trade uncertainty and a stable currency.
Budget 2025’s household and business supports “should keep economic activities strong”, say analysts, while investment into innovation and boosting the equities market would open up “new opportunities for growth”.
In a Feb 19 note, JP Morgan’s analysts say retail landlords such as Frasers Centrepoint Trust (FCT) and CapitaLand Integrated Commercial Trust (CICT) “should also benefit from increased supermarket spend via CDC and SG60 vouchers”.
Singaporean households will receive $800 in CDC vouchers. This will be given out in two tranches: $500 in May and $300 in January 2026. To mark Singapore’s 60th birthday, Singaporeans aged 21 and above this year will receive cash vouchers of up to $800. This will be given out in July. Each Singaporean adult will receive $600, while seniors aged 60 and above will receive an additional $200.
Another notable announcement that could impact local stocks is the extension and enhancement of tax concessions for S-REITs. These include extending the tax exemption on S-REIT qualifying foreign income and concessionary withholding tax of 10% to 2030 from 2025.
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Tax transparency treatment will also be expanded to co-location and co-working income from July 2025.
Extensions were also granted for tax concessions on REIT ETFs and GST remissions for S-REITs.
“We expect the extension of the tax concessions to continue to enhance the attractiveness of Singapore as a regional REIT listing hub,” says JP Morgan.
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Separately, the Singapore government will also invest $1 billion for a new national semiconductor R&D fabrication facility, and refresh Singapore’s public biosciences and medtech research infrastructure in one-north.
The analysts believe this will enhance the attractiveness of CapitaLand Ascendas REIT ’s (CLAR) existing R&D facilities in one-north.
After marking an all-time high close price on Feb 18, the Straits Times Index has surged 0.27% higher as at 10am on Feb 19, to 3,936.030 points.
Even at JP Morgan’s “bull case” STI target of 4,200 points, or 7% above its current level, the benchmark index still offers about 4.5% dividend yield based on consensus estimates, “which is higher than most Asia ex-Japan markets,” say analysts.
JP Morgan’s top picks from the Singapore Exchange are DBS Group Holdings, United Overseas Bank , Singapore Telecommunications , ST Engineering, CICT and Keppel DC REIT.
