Singapore: Asia’s Banking Magnet | Global Finance Magazine

Singapore has strengthened its position as Asia’s top financial center, according to the Global Financial Centers Index by Z/Yen Partners. In September, GFCI went ahead in Hong Kong, making Singapore the first in Asia. Globally, the top five are New York, London, the two Asian cities, and San Francisco.

Z/Yen prepared the GFCI report in collaboration with the China Development Institute, based on data from the United Nations and the World Economic Forum, assessing the competitiveness of financial centers from telecom infrastructure to regulation to human capital.

The recent lifting of the Covid-19 lockdown imposed on Hong Kong is expected to be a one-off, when Singapore took the lead in Asia for the first time in September last year. Now, there are reasons to believe that Singapore will take the top spot, even for an emerging ASEAN hub, as well as the island nation’s growing status as a wealth management and private sector hub. Bank.

“The difference between [Singapore and Hong Kong] Heron Lim, an economist at Moody’s Analytics in Hong Kong, says only one point separates the two. More interestingly, he added, “Singapore maintains a consistent lead over Hong Kong in all five areas of competitiveness used to evaluate financial centers: business environment, human capital, infrastructure, financial sector development and reputation.”

Singapore has performed well in key metrics, now ranking second in three out of five – business environment, infrastructure and financial sector development. “Only London’s good performance in human capital and reputation puts the city second only to Singapore overall,” says Lim. “So this is a testament to improving Singapore’s attractiveness to financial institutions.”

Hong Kong’s loss, Singapore’s gain

As doubts grow over the independence of Hong Kong’s institutions, Singapore appears to offer a clear and reliable common law legal system; A stable and efficient government aimed at neutrality between Western and Chinese business interests; A low tax environment that has encouraged the likes of BlackRock, Sony Music, Dyson, Tencent and TikTok to set up regional bases.

In the process, Singapore experienced an influx of immigrants, along with newcomers to the Chinese diaspora. Lianhe Zaobao, a Singaporean Chinese daily, reported in April that up to 3,500 netizens became Singaporeans this year, most of them from China. A report published the same month by New World Health and Henley & Partners named Singapore the world’s fifth wealthiest city, with 2,800 more resident millionaires than last year. Singapore leads Hong Kong as the latter’s ambitions are thwarted by China’s “Great Firewall”, which monitors online content and blacklists websites such as Wikipedia, Facebook and X (formerly Twitter).

Singapore’s wealth management industry, dominated by single-family offices, is booming—more than 700 have set up shop there in the past few years. One attraction is that the city-state offers a tax-backed flexible capital company structure. Meanwhile, a rush of capital to Singapore’s private banks has enabled them to offer sophisticated, artificial intelligence-enabled customer services and higher credit ratings than banks and their parent. In the wake of the US small-bank crisis earlier this year, demand for Singaporean banking services from US customers has been particularly strong.

The unintended consequences of Singapore’s rise include high domestic inflation in the real estate sector – residential rents have risen by up to 100 per cent in the past two years – and a car-free car ownership certificate and median price. S$105,000 (some US$77,000).

Even Singapore is not immune to the risks that can arise in its fast-growing financial sector. “The money laundering scandal is the latest example of Singapore’s use of its position as a global financial center for illegal activities,” said Lim, who has named Singapore as a key location for tax evasion and cross-border litigation in the United States. An investigation involving Chinese nationals accused of defrauding US$2.8 billion in what Second Home Affairs Minister Josephine Teo described as “one of the biggest anti-money laundering operations not only in Singapore but possibly in the world” is underway in Singapore. Singapore has set up a ministerial committee to review safeguards. Such responses demonstrate its determination to earn the trust necessary to become a global financial center.

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