SG Market (20 Feb 18)

MARKET OVERVIEW
- The market could continue its recovery from the recent sell-off after Budget 2018 turned out to be a fiscal plan for the future, with investors relieved by the delay in GST hike till 2021-2025 and a small increase in stamp duty for home buyers as well as other schemes to keep the country relevant in a competitive world.
- Technically, the next move for the STI is to fill the breakdown gap at 3,520, with 3,460 now acting as the immediate support.

ECONOMY WATCH
*Budget 2018
- Overall market-friendly budget measures.
Positives:
1) Corporate income tax rebate raised to 40% this year and extended to 20% in 2019;
2) REITs to gain from proposed removal of tax on REIT ETFs,
3) Healthcare firms and education providers could benefit from increased government spending in the sectors;
4) Construction firms to benefit from increased spending on infrastructure,
5) O&M companies see a reprieve on a deferral on foreign workers' levy.

Negatives:
1) Consumer stocks, including F&B operators and retailers, as well as hospitality plays could be impacted by higher GST of 9% but only from 2021-2025, which will be mitigated by $100-300 cash handouts;
2) Property developers as the 1ppt increase in buyer's stamp duty for property values of above SGD1m could add hefty cost to en bloc deals but unlikely to dampen buying demand,
3) Utility companies and REITs could be hit by higher expenses with the introduction of carbon tax.

NEUTRAL NEWS
*ComfortDelGro
- The regulatory board will enter the second phase of the deliberation process for ComfortDelGro's proposed alliance with Uber.
- The next stage may take up to 120 working days to complete, too assess that the deal would not raise competition concerns.
- To recap, ComfortDelGro proposed to acquire a 51% stake in Lion City Rental, a private car rental firm owned by Uber.
- With the JV, the fleet of both taxis and private-hire cars will come under centralised fleet management system, which handles dispatching of vehicles to customers.

*LTC Corp
- Updated that controlling shareholders, Mountbatten Enterprises, received valid acceptances constituting 0.58% of firm, bringing its latest shareholding to 49.12%.
- The privatisation bid at $0.925/share was recently launched on 9 Feb and the offer document is still pending release.