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Singapore is now THE financial centre of Asia

Singapore-Investments

Pocket-sized powerhouse Singapore is often dubbed the ‘Asian Switzerland’. Like its European soulmate, it is a positive presence in various international indicators. And it just overtook Hong Kong as the leading financial hub of Asia – hailed by Fortune as new partner to London and New York.

The Global Financial Centres Competitiveness Index 2023 1 put Singapore at no 3 globally, behind New York (1) and London (2). Meanwhile, Hong Kong slipped to fourth place. Other influential reports seem to agree Singapore is now effectively the key market of entry for the region.2 It also displaced Hong Kong and Beijing in FinTech.

So, is Hong Kong’s misfortune Singapore’s gain – or is there more to Singapore?

Hong Kong was, certainly, adversely affected by China’s draconian Covid policies and is struggling to reprise its role as a global finance hub3. China’s abandonment of zero-Covid has not yet ended the uncertainty.

Disillusioned high net worth Chinese individuals and investors are increasingly gravitating to Singapore. Assets under management grew 16 per cent to $5.4 trillion in 2021, more than three quarters from outside the country4. Reuters reports Singapore is not just a haven for money, but a prospect for more active investments – encouraged by the government’s global investor programme incentives.

Beyond this, however, Singapore, appeals to foreign investors and companies as a natural entrepot and for its rule of law, infrastructure, friendly approach to foreign business and competitive tax system.

A strategic bridge

The island state is in an ideal market position between east and west. Geographically, it sits between the eastward South China Sea and the westward Strait of Malacca. Singapore is one of Asia’s leading hubs for international air traffic.

Its geo-strategic significance is reflected in its welcoming policies to foreign trade and investment from Asia and the west.

Its banking sector, for example, works happily with US and UK banks. In June, JP Morgan Chase & Co’s commercial bank became one of the latest to announce entry into Singapore5.

Politically stable, law-abiding

Singapore

Singapore possesses many great traits for trade and business in an increasingly unstable world. With low crime, the city-state adheres strongly to the rule of law. It was top in Asia in the International Property Rights Index6. In the Transparency International Corruption Perceptions Index7 it was the fifth least corrupt country in the world and the only Asian country to make the top ten.

Infrastructure, tax and government support

The government has done a lot to create the conditions for Singapore’s current status. This includes measures to increase its appeal to fund managers and wealth planners. 2018 saw introduction of a new investment fund structure, the Variable Capital Company, a domicile for alternative funds. The Economic Development Board was set up to enable and assist overseas businesses, trade and investors.

HSBC, whose presence in Singapore dates to 1877, lists ease of incorporating a company, efficient regulatory framework and extensive network of free trade agreements as other advantages. In addition, the country is home to the largest forex centre in the region8.

The taxation system, too, is alluring. Various incentives and grants apply for foreign companies 9. Singapore’s corporate income tax rate is a flat 17 per cent10 (compared to the US’ current 21 per cent). There is no capital gains or stamp duty for scripless shares listed on the Singapore Stock Exchange transferred electronically via the Central Depository11.

ESG

Like Hong Kong, the country is trying to promote sustainable finance. A Moody’s12 commentary identified Singapore’s leading financial market position in south east Asia as pivotal to the region’s sustainability ambitions. Singapore is the only country in the Asian region to have set up a classification system (taxonomy) for environmentally sustainable finance. Other measures include an ESG skills training subsidy, mandatory ESG disclosure13 and a green bond.

If you would like to know more about our 2-year fixed-rate bonds, you can get in touch with our team

1 Professional Articles – Z/Yen (zyen.com) & https://www.ft.com/partnercontent/vistra/is-singapore-nudging-ahead-of-hong-kong-as-asias-preferred-financial-hub.html

2 Is Singapore nudging ahead of Hong Kong as Asia’s preferred financial hub? – Financial Times – Partner Content by Vistra (ft.com)

3 Singapore jumps over Hong Kong to third place in Global Financial Centres Index | Fortune

4 Disillusioned at home, super-rich Chinese set their sights on Singapore | Reuters

5 JPMorgan commercial bank enters Singapore, Israel in global push | Reuters

6 Singapore (internationalpropertyrightsindex.org)

7 Singapore Ranked 5th Least Corrupt Country in Transparency International Corruption Perceptions Index 2022 (cpib.gov.sg)

8 Why Singapore’s great to live and invest in – HSBC SG & Singapore is largest forex centre in Asia, third largest globally | The Straits Times

9 ibid

10 Basic Guide to Corporate Income Tax for Companies (iras.gov.sg)

11 Why Singapore’s great to live and invest in – HSBC SG

12 ESG Credit and Sustainable Finance | Moody’s (moodys.com)

13 ESG Investing News and Analysis – ESG Clarity (esgclarity-intelligence.com)

Singapore Investments

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Interested UHNW individuals, corporate investors, or wealth managers should complete the contact form below.

DISCLAIMER. The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the assets invested. Only being open to Certified Professional or Institutional clients.

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