PM National Day Rally

Bold strategic moves
• NDR message outlines positive moves in infrastructure, housing, healthcare and education
• Relocation of Paya Lebar airbase and revamp of Southern corridor to meet long term population needs
• Big plans for Changi airport will sustain Singapore’s leading hub position
• Potential beneficiaries are SIE, STE, MCOT, KepLand, CMA, MINT, and Pan United.

Strategic shift. In PM Lee Hsien Loong’s NDR speech, he outlined new strategic plans to assist Singaporeans to cope with global changes, an ageing society and rising inequality. Policy changes focusing on infrastructure, healthcare, housing and education address social needs as well as chart long term plans to maintain Singapore’s leading aviation hub status.

Maintaining leadership as an aviation hub. Plans to upgrade and expand Changi Airport with the revamp of T1, new terminals T4 and T5, and an additional runway will double the airport’s total capacity to 132m passengers by 2023. Clear winners are MRO players - SIA Engg, ST Engineering, while SATS may face more competition from new entrants. Construction of these mega projects costing >S$1.5bn will raise construction demand, benefiting specialist contractor like Yong Nam and building material supplier Pan United.

New infrastructure developments to meet long term population needs. The redevelopment plans for a waterfront city in Tanjong Pagar, part of the Southern Corridor covering 1000 ha and relocation of Paya Lebar Airspace to Changi, freeing up 800 ha of land, will have a positive impact on values and provide more room to house Singapore’s long term population needs of 6.8m people by 2030. The move will benefit industrial REITS with assets in Paya Lebar - Sabana (49%) , Mapletree Industrial Trust (29%) and Cambridge REIT ( 19%) while beneficiaries of the redevelopment plans for Southern Corridor are Mapletree Commercial and Keppel Land.

Bold steps reinforce investors’ confidence. While there is no significant near term impact on equity markets as plans are long term, these plans will strengthen investors’ confidence in a government with long term vision and sound strategies to sustain Singapore’s leadership position in Asia. Singapore’s strong reserves, stable currency and sound policies should offer resilience to the Singapore equity market, particularly in an environment of uncertainties and funds outflow from emerging economies.