The Singapore stock market can expect some negative impact from a more “pro-worker” position, which analysts anticipate the government to implement, after the ruling People’s Action Party’s (PAP) share of the popular vote fell to a historic low of 60.1 percent.
Real estate stocks, for example, may be affected if the income ceiling for purchasing new HDB flats is increased, as this will probably affect demand for private housing.
“The government has a sense from the ground that there are a lot of concerns, such as the higher cost of living and rising home prices,” said Chua Hak Bin, an economist from Bank of America Merrill Lynch.
“Going forward, the market will have to take into account a probable shift in policy emphasis from GDP growth to growing wages, and addressing the concerns of lower-income and middle-income workers, as well as issues such as the growing cost of living and rising housing prices.”
This could slant the government’s position from largely “pro-growth” and “pro-business” towards being slightly more “pro-worker,” Dr. Chua noted, adding that this could result in a negative market response.
On the contrary, Prasenjit Basu, an economist at Daiwa Capital Markets in Singapore, believed that some of the anxieties had already been present in the market before the General Election and since only six out of the 87 seats were lost to an Opposition party, the market is expected to recover today.
However, some analysts believe that investors will be worried that Singapore’s immigration and foreign worker policies may be tightened further.
“If the PAP achieves a significantly reduced popular vote, it may review some of its policies which have affected its popularity, like foreign workers, property and the integrated resorts,” Nomura analyst Lim Jit Soon said before Polling Day.
PAP garnered 60.1 percent of all votes cast in this year’s GE, its lowest vote share since Singapore’s independence and slightly lower than the 61 percent it achieved in the 1991 GE.
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