singapore shares end lower as investors lighten commitments 240062015

Singapore stocks bucked the generally bullish trend prevailing in regional markets due to the positive developments in the negotiations between Greece and the eurozone, as late session profit-booking by investors eroded the gains.

Investors preferred a cautious approach given the announcement of the 2015 Singapore Budget scheduled at 15:30.

Indices and sectors

The Straits Times Index (STI) ended 14.36 points lower or -0.42 per cent to 3,421.3, taking the year-to-date performance to +1.67 per cent. The FTSE ST Mid Cap Index declined -0.21 per cent, while the FTSE ST Small Cap Index gained +0.14 per cent.

The Singapore Exchange traded 1,068.3 million shares valued at SG$1,281.9 million. Despite the fall in the STI, in the broad market gainers outnumbered losers by 224/214.

Amongst the FTSE ST sectors, the top gainers were technology (+1.20 per cent), basic materials (+0.83 per cent), and fledgling (+0.37 per cent). The losing sectors were telecommunications (-2.46 per cent), healthcare (-0.85 per cent) oil and gas (-0.83 per cent) and utilities (-0.71 per cent).

Stocks

The Straits Times Index was weighed down due to falls in key stocks such as Singapore Telecommunications Ltd (SGX:Z74), which ended lower by 2.80 per cent to SG$4.16, Hongkong Land Holdings Ltd (SGX:H78), which declined 2.30 per cent to SG$7.60, and Singapore Airlines Ltd (SGX:C6L) which ended down 2.12 per cent at SG$12.00.

SIIC Environment Hldg Ltd (SGX:5GB) fell 0.76 per cent to SG$0.131, despite reporting fourth-quarter earnings that more than doubled to SG$14.32 million, boosted by a higher share of results from joint ventures and associates, according to The Business Times.

Economic news, currency and insight

According to data released jointly by the Monetary Authority of Singapore and Ministry of Trade and Industry, inflation in December fell further into negative territory chiefly due to the impact of cheaper oil as well as lower inflation in food and services. The CPI-All Items inflation fell to -0.4 per cent in January from -0.1 per cent in December 2014, somewhat lower than the -0.3 per cent fall expected by economists surveyed by Bloomberg, according to The Business Times.

Singapore’s Jubilee Budget

The 2015 Jubilee budget unveiled yesterday by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam focused on strengthening Social Security and building for the future by enhancing the skill sets of Singaporeans. The government forecasts an overall budget deficit of SG$6.7 billion for the 2015 financial year, according to Channel News Asia.

The government intends to boost its spending on continuing education and training for Singaporeans, through the implementation of the SkillsFuture program, from the current average of SG$600 million per year to over SG$1 billion per annum from now until 2020. The SkillsFuture program provides students with career guidance and improved internship programs at institutes of higher learning, and subsidies and programs to help sharpen their skills once they start working.

The government proposed the Silver Support Scheme which would provide cash supplements to needy and elderly Singaporeans above the age of 65 years. The measures will complement existing schemes like the Workfare Income Supplement and the Pioneer Generation Package. The government also intends to make changes to the Central Provident Fund, the country’s national savings scheme, to help Singaporeans boost savings during their working lives and higher income during retirement years.

For the corporate sector, the budget proposed higher grant support for innovation, overseas expansions and growth through mergers and acquisitions. In another innovative proposal, the government will set up a venture debt risk sharing program that would serve as an alternative to equity financing and bank loans routes for high-growth companies. The government may assume a 50 per cent risk sharing ratio in the scheme which may be introduced with selected financial institutions.

In view of the tight conditions in the labour market, the government deferred this year’s levy increases on foreign workers for S-pass and Work Permit Holders in every sector. It also promised to restructure foreign worker levies to allow firms more time to adjust to labour market conditions.

The government also raised the personal income tax rates of higher income bracket earners who make at least SG$160,000 a year or more. For those with a chargeable income of over SG$320,000, the top marginal tax rate will increase by 2 per cent to 22 per cent. "It is very clear that this is a concrete step by the government to address the issues of income inequality and the wealth gap which have constituted a significant political issue," said political analyst Derek da Cunha, as quoted by AsiaOne.

Income tax and goods and services tax concessions for real estate investment trusts in Singapore will be available for an additional term of five years.

"Budget 2015 takes us into our future. Our aspirations are attainable. We can build a future that keeps social mobility alive in each new generation. A future that meets the aspirations of young and middle-aged Singaporeans, and enables us to realise the best in ourselves. And a future that provides greater assurance as we grow old,” said the Finance Minister, according to Channel News Asia.

"The 2015 budget touches every aspect of life, from support for lifelong learning to affordable education to sharper initiatives to help companies to continue to raise productivity, innovation and internationalise. Ultimately, it aims to create a sustainable infrastructure that is needed to maintain a vibrant, future-ready economy," said Mrs Mildred Tan, Managing Director, Ernst & Young Advisory Pte Ltd, according to AsiaOne.

"It seems to us that Budget 2015 focuses much more on long-term measures to boost the supply-side capacity of the economy, but is lacking in some of the short-term 'consumption' boosting measures that we, together with other analysts, have been expecting…there were no significant cash handouts given out in this budget," said Credit Suisse economist Michael Wan, in The Business Times.