THE Singapore stock market could see some negative impact from a more 'pro-worker' stance which analysts expect the government to adopt, following the ruling People's Action Party's share of the popular vote falling to a historic low of 60.1 per cent.
Property stocks, in particular, may be affected if the income ceiling for buying new HDB flats - a review promised during the hustings - is raised, as this will likely affect demand for private housing, they add.
'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 Bank of America Merrill Lynch economist Chua Hak Bin.
'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 tilt the government's stance from mainly 'pro-growth' and 'pro-business' towards being slightly more 'pro-worker', Dr Chua said, adding that this could cause a negative market reaction.
Terence Wong, the co-head of DMG & Partners Securities research, similarly said that he expects the market to have a 'slightly negative' reaction.
'It is no longer like in the past, when the main concern was being pro-business,' he said. 'Now, they have to look after the workers a bit more.'
Prasenjit Basu, an economist at Daiwa Capital Markets in Singapore, has a different take. Some of the anxiety was already priced into the market in the days leading up to the General Election, he said. Since only six out of 87 seats were lost to Opposition parties, the market will recover today, he said.
Analysts said investors will, however, be worried that Singapore's foreign worker and immigration policies may be tightened further.
In addition, the government has in the past demonstrated its political will by cutting the employer's CPF contribution rate during economic downturns. It may not be as quick to take such an action in future with an electorate that is increasingly concerned about the rising cost of living and dwindling retirement savings.
Noted Nomura analyst Lim Jit Soon before Polling Day: '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.'
Property stocks, for example, were depressed after National Development Minister Mah Bow Tan said early last week that the income ceiling for buying new HDB flats - unchanged for the past 17 years for first-timers - could be raised from the current $8,000 to $10,000 in a few months.
One developer noted that this could channel some demand away from the private housing market.
'If the income ceiling for BTO (build-to-order) flats is raised, so will the ceiling for EC (executive condominium) flats,' he said. 'Some buyers could switch to buying EC or HDB flats instead of private property.'
In addition, there are worries that more measures to cool the property market could be introduced. This will continue to depress property stocks until there is greater clarity, DMG's Mr Wong said.
PAP won 60.1 per cent of all votes cast in this year's GE - its lowest vote share since Singapore's independence and a tad lower than the 61 per cent it received in the 1991 GE.
Based on the past five GEs, there is no clear historical trend as to how the benchmark Straits Times Index (STI) will perform over a one-month period post polling day, noted DMG.
But in the 2001 GE, when the PAP won 75 per cent of votes - the highest over the past five GEs - there was an 11.9 per cent rise in the Straits Times Index (STI) in the one-month period after polling day.
This is in stark contrast to the 1991 GE, when the PAP secured 61 per cent of votes (the lowest in the past five GEs) and the STI fell 3.1 per cent over the next month.