📊 Market bytes

⬆️ Straits Times Index up from 3146.32 on Monday (12th Feb) to 3221.94 before closing on Friday (16th Feb)

→ STI’s positive performance which led to a ~1.2% increase closing price on Friday was likely due to the positive response of the market upon the release of Budget 2024
→ This was up from 3138.30 which was closed on the previous week 

📈 Top Performing Stocks of the week includes

1. DBS Group Holdings SGX:D05

2. Jardine Cycle & Carriage SGX:C07

3. United Overseas Bank SGX:U11

4. Jardine Matheson HLDGS SGX:J36

5. Great Eastern HLDGS SGX:G07

6. NIO Inc. OV SGX:NIO

7. Overseas-Chinese Banking Corp SGX:O39

8. UOL Group SGX:U14

   

   Top Gainers of the Week, SG Investors

🇸🇬 Main bytes

1️⃣ More Young Singaporeans Taking Loans to Buy Private Homes, Despite Elevated Interest Rate Environment

A growing trend among young Singaporeans reveals a significant interest in the property market, representing over a third of those seeking home loans. Despite concerns about affordability and rising interest rates, banks report low default rates within this demographic.

This surge in interest can be attributed to various factors, including rising incomes and flexible resale options compared to public housing. Additionally, the allure of potential higher returns motivates many to invest in private properties.

However, the current economic landscape presents challenges, particularly with the upward trajectory of interest rates. For many homeowners, this translates to increased monthly instalments, prompting considerations of switching to fixed interest rates for financial stability.

In response to these challenges, banks stress the importance of prudence and early financial planning. They advocate for thorough discussions with financial institutions to ensure affordability and readiness for potential fluctuations in interest rates.

While the aspiration for homeownership remains strong among young Singaporeans, a cautious approach to long-term financial commitments is paramount. By staying informed and proactive, individuals can better navigate the complexities of the housing market and secure their financial futures.

2️⃣ Singapore Keeps 2024 Growth Forecast at 1%-3% As Economy Slows to 1.1% Expansion in 2023

Singapore's Ministry of Trade and Industry (MTI) maintains a cautious growth forecast of 1%-3% for 2024 amid global economic uncertainties. Despite a sluggish 1.1% expansion in 2023, down from 3.8% in 2022, the economy faces challenges. While advanced economies may initially moderate due to tight financial conditions, a gradual recovery is anticipated, especially with a potential uptick in regional economies.

Key sectors such as manufacturing and trade-related services are expected to rebound, supported by the recovery in global electronics demand. However, challenges persist, with the pace of growth likely to moderate across various sectors, including retail, as more Singaporeans travel abroad.

Economists anticipate GDP growth to reach 2.2% in 2024, largely driven by manufacturing and trade-related services recovery. Government initiatives, such as the recent budget, are expected to focus on helping businesses adapt and seize opportunities amidst the economic uncertainties.

Despite these challenges, monetary policy remains appropriate, according to Mr. Edward Robinson, chief economist of the Monetary Authority of Singapore. Core inflation has eased from its peak in January 2023, although it remains elevated. Additionally, the property market is expected to stabilise further, providing a stable backdrop for economic growth.

3️⃣ In Case You’ve Missed It: Budget 2024 In a Nutshell

Finance Minister Lawrence Wong presented Budget 2024, a comprehensive plan addressing immediate cost-of-living challenges for both households and businesses while also focusing on bolstering economic competitiveness, supporting young families, and ensuring workforce adaptability.

Here's a breakdown of Budget 2024 in a nutshell:

1. Cost-of-living support: 
   To alleviate the strain of rising living expenses, an additional S$1.9 billion will be injected into the GST Assurance Package.
   This includes various measures such as increased vouchers, cash payments for eligible Singaporeans, and additional rebates for utilities and service charges.
   

2. Business support: 
   Recognising the pressures of escalating operational costs, a S$1.3 billion Enterprise Support Package is introduced.
   It encompasses a 50% corporate income tax rebate, enhanced financing schemes, and an extension of SkillsFuture credits to assist companies in up-skilling their workforce.
   

3. Investment incentives: 
   In response to global competition for investments, Singapore will introduce a Refundable Investment Credit to attract companies engaging in significant economic activities like manufacturing expansion or research and development initiatives.
   

4. SkillsFuture for mid-career workers: 
   A new SkillsFuture Level-Up Programme aims to empower workers aged 40 and above with retraining opportunities through subsidies, top-ups in SkillsFuture Credits, and monthly training allowances.
   

5. Wage adjustments: 
   Starting July 1, an increase in the Local Qualifying Salary and minimum hourly rates for full-time and part-time workers respectively is implemented to ensure fair wages and address income disparities.
   

6. Housing support: 
   Young couples awaiting Build-To-Order flats will receive financial aid to rent public flats through a new voucher scheme, easing their housing burdens during the waiting period.
   

7. CPF system tweaks: 
   Several adjustments to the Central Provident Fund (CPF) system include higher contribution rates for specific age groups, an increase in the Enhanced Retirement Sum, and consolidation of accounts for seniors to optimise retirement savings.
   

8. Tax rebates and reliefs: 
   To mitigate cost-of-living concerns, a 50% personal income tax rebate is introduced for the year 2024, alongside an increase in the income threshold for dependant-related tax reliefs.
   

9. Property tax changes: 
   Amendments to property tax rates, including adjustments to Annual Value bands and ABSD refund provisions for eligible seniors downsizing properties, aim to optimise housing affordability and market dynamics.

These multifaceted initiatives collectively aim to strengthen Singapore's socio-economic fabric by providing targeted support to individuals and businesses, fostering resilience, and ensuring inclusivity across different segments of society.

🛰️Tech bytes

1️⃣ ChatGPT is Making Its Presence Felt in Classrooms

ChatGPT, an AI chatbot, is revolutionizing classrooms in Singapore, offering personalized feedback and promoting independent learning. Despite initial skepticism, students are discovering its value in refining their work and developing critical thinking skills.

Educators leverage ChatGPT to teach AI literacy, ensuring students understand its limitations and ethical usage. While challenges exist, such as inaccuracies and localization issues, ChatGPT fosters inclusivity by providing resources to students who lack access to educational support.

In classrooms like Fuchun Secondary School, ChatGPT enhances writing and critical thinking skills, enabling students to customize responses to a local context. However, discernment is emphasized, teaching students to evaluate and modify AI-generated content.

As AI reshapes education, Singaporean educators strive to empower students with the skills needed for success in the digital age. With ChatGPT, the journey towards personalized learning and AI literacy continues to evolve in Singapore's classrooms.

2️⃣ Singapore Unveils Ambitious $742 Million Investment in AI

Singapore is making significant strides in the field of artificial intelligence (AI) with a newly announced investment of S$1 billion (US$742 million) over the next five years. Lawrence Wong, Singapore's deputy prime minister and finance minister, revealed this initiative during the 2024 budget speech, emphasising the importance of AI in enhancing productivity across various sectors.

The investment aims to bolster Singapore's AI talent pool, ensure access to essential chips for AI tasks, and establish partnerships with leading companies to establish AI centers. Additionally, Singapore plans to upgrade its broadband network to achieve speeds of up to 10 gigabits per second by the end of the decade, facilitating the widespread adoption of AI technologies.

This investment aligns with Singapore's revised National AI Strategy, which prioritises the cultivation of local talent while also attracting top overseas researchers. One significant project involves the development of Southeast Asia's first large language model, catering to the region's diverse cultures and languages, with collaboration from key agencies.

While Singapore's AI ambitions are commendable, some analysts suggest the need for a clearer focus, advocating for specialisation in Southeast Asia-focused language models rather than competing directly with broader AI models like GPT-4. Nonetheless, Singapore's commitment to advancing AI technologies underscores its determination to remain at the forefront of innovation in the region and beyond.

🚗 Transport bytes

1️⃣ Rise in Vehicle Taxes: Singapore's Fiscal Boost

Singapore's vehicular taxes and certificates of entitlement (COE) revenue surged by 22.4% to $7.26 billion in the 2023 financial year, marking the highest amount in at least six years. This increase is attributed to soaring COE premiums and stricter taxes on premium and luxury cars.

The upward trend in COE prices, which began in 2022 due to a tight supply and policy constraints, reached record highs in 2023. This escalation, including a significant rise in Additional Registration Fee (ARF) for costlier cars, contributed to the revenue surge.

In Budget 2023, the Government implemented measures to curb vehicle ownership, including raising ARF for expensive cars and capping Preferential Additional Registration Fee (PARF). As a result, COE revenue spiked by 23.9%, while vehicle tax revenue grew by 20% in the 2023 financial year.

Despite the anticipated softening of COE prices in 2024, the Government expects a modest increase in COE revenue alongside a notable rise of 9.3% in vehicle tax revenue. This projection aligns with the larger supply of COEs, translating to more vehicles being registered.

Vehicular taxes and COE revenue played a significant role in Singapore's operating revenue, contributing to 7% of the total in 2023, up from 6.5% in the previous year. As Singapore continues to navigate fiscal strategies and manage the transportation landscape, the evolution of vehicular taxation remains a crucial aspect of economic planning.

2️⃣ Luxury Car Sales Dip Amid Tax Changes

In 2023, Singapore saw a decline in luxury car registrations, with 296 units priced at S$1 million or more, down from 350 in 2022 and 360 in 2021. Factors contributing to this drop include a higher tax rate introduced in Budget 2023, economic uncertainty, and concerns over conspicuous spending following a major money laundering case.

The tax hike, reaching up to 320% for vehicles exceeding S$80,000 in value, significantly impacted luxury car prices. For instance, the cost of a Bentley Bentayga V8 surged by over 30% to nearly S$1.2 million post-revision. Additionally, the government capped the scrap value of cars at S$60,000, affecting rebate programs for high-end vehicles.

Registrations surged between March and May 2023, likely due to buyers securing Open category COEs before tax adjustments took effect. However, registrations sharply declined in June, indicating a temporary surge to avoid higher taxes.

Looking ahead, experts predict a subdued luxury car market in 2024, with customers showing interest mainly in new or limited-edition models unaffected by recent tax revisions. Geopolitical tensions and stock market performance also influence buyers' decisions.

While the luxury car market may face short-term challenges due to tax adjustments and economic uncertainties, historical trends suggest that market recovery typically occurs within a couple of years.

💬 Editor’s byte

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Looking forward to bringing you more insightful content in the next newsletter. Until then, stay safe and well-informed!

Cheers, D from bytedot

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