Trump’s Tax Policy impact on Singapore July 31, 2017

Trump’s Tax Policy impact on Singapore

The Trump administration’s tax policy covers most news sites nowadays with global stock markets closely watching its legislative outcomes, and this included the Singapore market as well. In this article we will review the possible impacts of Trump’s tax policies on the Singapore market, on its economy and also on certain stocks. Some knowledge on this macroeconomic factor could be useful in assisting investors in their decisions moving forward.

Trump has been sitting with tax reform negotiators from his administration and Congress, hoping for a breakthrough to legislate his tax policies before year 2017 end. And this has been a hot topic for global markets if you think about it, that is because the US is the largest economy making up almost a quarter of the world’s GDP, and with significant interconnectedness and the US dollar being the most widely used currency in global trade, big developments in its economy is a big deal to open economies such as Singapore that rely on trade and investments from its peers overseas.

So first off, we will do a brief overview of the Trump administration’s main proposed tax policies. For the most part, in terms of tax, Trump’s policies contrasted to that of Obama’s policies back in 2009 where he tried to raise taxes instead of lowering them like what Trump intends to do. A probable reason could be due to the financial crisis that Obama had to tackle with upon taking office, something which is not so much a focus for Trump now as compared to focussing on economic growth instead.

Here are the main Trump administration tax policy proposals:

1. We see big plans to reduce taxes across the board, corporate taxes from 35% to 15%, small business taxes to 15%, as well as reductions and repealing of several individual taxes. In theory, low corporate tax rates should result in companies having more cash to invest and expand their business, and with lower taxes in the US, it will be more favourable for companies to operate and invest in the US, in turn boosting the US economy.

2. We also see plans to allow repatriation of corporate profits held offshore at a one-time tax rate of 10%. This inflow of funds back into the US is intended to encourage investments in the country, spurring economic growth as well.

With so much focus on growth, it’s no surprise Trump’s victory tied in with a big stock market rally, not just in the US but for most of the world.

Now what impacts on Singapore can we expect if Trump successfully pushed through his tax policies?

1. Firstly, we might see increased exports to the US, assuming the new policies spur US growth. That is because with economic growth usually comes increased consumption and thus demand for imports from overseas. Increased exports to the US could benefit our manufacturing sector and companies that export to the US such as Venture Corp (V03.SI). Now the issue is that economic growth might not be guaranteed as a result of tax cuts. If we look back at the UK, which had reduced its corporate taxes from 28% to 20% since 2010, economic growth has not been spectacular, partly because of tepid domestic spending which the corporate tax reductions did little to improve. Of course there might be a different result in terms of the US, but it is something to keep in mind.

2. Secondly, we could see reshoring of multinational corporations back to the US due to favourable tax rates and lower taxes on repatriation of funds. This could indirectly impact Singapore’s manufacturing and finance sector jobs as US companies leave the country, and maybe even certain Singapore REITs could see some impact with regards to their occupancies as US tenants might move out. However investors need not have to worry so much on this as reshoring is still uncertain and difficult to predict.

3. Lastly, a rise in interest rates could affect Singapore mortgage rates, thus impacting the financial sector, banks in particular. The reason why interest rates could rise, in terms of tax policies, is because central banks usually raise interest rates if economic growth is expected to improve, whether from tax reductions or other factors. As US interest rates rise, mortgage rates pegged to it will follow, and we may see banks interest margins improving with regards to mortgage loans they issue to customers.

Overall we are still unclear of what to expect in terms of the impact of Trump’s tax policies regarding US and even Singapore’s economic growth. Global markets are eager to know, but it all depends on whether Trump is even able to push the policies through Congress into law.


So summing up, we learned briefly about Trump’s tax proposals as well as their possible impact on Singapore’s economy and stocks. It might be too early to tell clearly what the true impacts of Trump’s tax policies are, but investors have to be aware of the risks. Has the market priced in the effects of the tax policies? If so, we might see more downside if Trump fails to push through his policies. At the end of the day, this space is something to watch over the next few months.

Thanks for reading. If you wish to know more information about stocks, you can speak to your designated Trading Representatives or a Dealer at a Phillip Investor Centre near you.

Important Disclaimer

Reminders: Phillip Securities Pte Ltd (“PSPL”) will generally provide you “execution only” services – see Guide and Cautionary Notes for Trading Accounts on You are therefore personally responsible to make your own decisions on the suitability of every transaction you do through PSPL. One exception is if you specifically apply and pay for advice from PSPL. The other exception is Execution-Related Advice on listed Excluded Investment Products (“ERA”) which may be given to you, but only subject to (a) you accepting personal responsibility to ensure any such advice is suitable before you act on it, and (b) you ensuring that you receive and understand the rationale for every ERA given to you. Materials (including market and analyst reports) are provided to you as information on an execution only basis for you to make your own suitability decisions. Materials which are not ERA are provided strictly as you asked. These reminders apply to the contents of this e-mail as well as any accompanying materials sent under its cover. General Disclaimer: The information/materials provided (whether as attachments to this e-mail or in its body), where they are not ERA, are provided for general information/circulation only and not intended and therefore should not be taken as any offer or solicitation to do any investment or trade. No assessment has been made by PSPL as to the suitability for you of any materials in this e-mail. As always, the decision to trade and/or invest remains solely with you. Information/materials in this e-mail are provided “as is” without warranty of any kind, either express or implied. Such information/materials provided have been procured from sources believed to be reliable and accurate (but whose reliability and accuracy cannot be and are not warranted); and may have been acted on by PSPL or members of the PhillipCapital group before being made available to you. All investments are subject to investment risks. Ideally you should and you may wish to seek advice from a financial adviser before making a commitment to purchase or invest in the investment product(s) mentioned in this e-mail or its attachment(s). If you choose not to do so, you are then choosing to make your own decision on whether any of the said investment product(s) are suitable for you. Neither PSPL nor any fellow member of the PhillipCapital group of entities shall, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email.

Confidentiality Note: This e-mail and its attachment(s) are intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it.

About the author

Mr Timothy Ang
Equity Dealer

Mr. Timothy Ang currently provides dealing services to over 10,000 trading accounts and is part of the POEMS Dealing, the core in-house dealing department of Phillip Securities Pte Ltd.

Timothy’s investment methodology uses a combination of Fundamental and Technical Analysis, focusing on strong companies that show future promise. Apart from his dealing role, he often provides training seminars on Fundamental and Technical Analysis topics to further enrich his clients’ financial knowledge.

Timothy holds a Bachelor Degree of Accounting and finance from the University of Western Australia.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066