(July 16): Hong Kong remains a “formidable” financial centre even though inquiries from businesses looking to come to Singapore are picking up amid the uncertainties in the Chinese territory, said the chief of Singapore’s financial regulator.
“There are more inquiries as you would expect when there’s greater uncertainty in Hong Kong,” Ravi Menon, managing director of the Monetary Authority of Singapore, told reporters Thursday, without saying where the queries are coming from. “But actual fund flows are not very large. Flows of activities and businesses are also not significant.”
Hong Kong, which competes with Singapore as a regional financial hub, has suffered setbacks as China tightens its grip on the former British colony through a new security law. And while tensions between the U.S. and China are fueling concerns that the city may lose its appeal for international finance and trade, Menon said it still has its attractions.
“Security law-related issues are one set of considerations” for businesses in Hong Kong but that is “just one of a whole set of factors in the territory,” Menon said at a briefing on the MAS’s annual report. “It’s better to compete with a strong financial center because that means growth and opportunities in the region are good. If things go badly wrong in Hong Kong, that’s not good for the region, and not good for Singapore.”
Singapore has seen increases in foreign-currency deposits over the past year, which the MAS has attributed to factors including global liquidity abundance and inflows from many jurisdictions. Such deposits were up 19% in May from a year earlier, according to MAS data tracked by Bloomberg Intelligence.
Among the signs that Singapore could benefit from Hong Kong’s troubles, there have been cases of wealthy people and expats preparing to move to the Southeast Asian nation and elsewhere. Still, there’s little evidence so far of widespread capital flight. Hong Kong bank deposits stood near record levels in May and the city’s currency continues to trade at the strong end of its permitted band against the dollar, a sign of persistent inflows.
Many financial firms have businesses in both Hong Kong and Singapore, Menon said. “The financial services industry in Asia is growing, so it is not a zero-sum game,” he said. “We are watching Hong Kong closely but with concern, that the issues there are sorted out and settled, and that stability returns and then we can move forward.”
