The People's Action Party's (PAP) landslide win could give the lacklustre share market a boost - if only in the short term, according to fund managers.
They believe that the resounding win will bolster confidence among investors who may have been waiting on the sidelines for the polls to be concluded.
UBS Wealth Management equity analyst Lee Wen Ching said: "Political certainty is viewed as a merit among investors, especially in times of economic uncertainty.
"Given the strong mandate achieved by the PAP, we would not be surprised if the market were to stage a relief rally in the near term as the overhang of election results has been addressed."
More broadly, the election result is also likely to "boost confidence among foreign investors", said Ms Lee.
"The political and regulatory landscape should be viewed with greater certainty - that the Government will be able to execute its planned policies - and investors can expect continuity in the direction of Singapore's long-term economic policies."
But she added that, over the longer term, Singapore's equity market will still be primarily influenced by regional and global factors, including the US Federal Reserve's pending rate hike and China's stock market volatility.
The global economic outlook continues to be shaky, especially with slowing growth in China.
Ms Teh Hooi Ling, Aggregate Asset Management's research head, also expects to see a "positive knee-jerk reaction" in Singapore stocks and even the Singapore dollar. "But this is likely to be short-lived if the outlook for regional and global economies remains uncertain," she added.
Mr Sat Duhra, portfolio manager at Henderson Global Investors, noted that the overall result was "hardly unexpected".
He said a stronger mandate for the PAP is "conducive to kick-starting initiatives (that can) address domestic weakness led by weak productivity, slowing gross domestic product growth and mitigate the impact of a weakening China".
But Mr Duhra believes the election results will not have a material impact on the capital flows or the Singapore currency because "that unwind has already begun from external events".
"However, Singapore will weather the storm better than its ASEAN counterparts," he said, noting that Indonesia and Malaysia will continue to be the "real concerns" when it comes to capital outflow and currency weakness.
This means that the Singapore dollar will stay relatively attractive, said Mr Duhra.
But, he added, referring to the Singapore Interbank Offered Rate, "the impact on Sibor from rising rates, property over-supply and weak manufacturing remain real threats".
This article was first published on September 14, 2015.
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