Singapore’s strategic positioning as a global financial hub continues to strengthen, with the city-state outpacing long-time rival Hong Kong.
Bolstered by political stability, favourable tax policies, and a reputation for neutrality, Singapore is attracting a growing share of foreign capital.
As tensions between the US and China escalate, the flow of investments into the region has further tilted in Singapore’s favour.
Its financial institutions, led by Oversea-Chinese Banking Corporation (OCBC), are navigating these changes with a balance of local focus and global reach, positioning the city as a safe haven for investors seeking stability in uncertain times.
OCBC drives Singapore’s financial sector with $18.4 billion revenue in 2023
OCBC, the second-largest bank in Singapore with $448 billion in assets, has become emblematic of the city-state’s robust banking sector.
Generating $18.4 billion in revenue in 2023, the bank accounts for 62% of its earnings within Singapore, while its Southeast Asian and Greater China operations contribute 19% and 13%, respectively.
Its diversified revenue streams and strategic investments in wealth management have helped the bank maintain resilience amid geopolitical headwinds.
The bank also holds a majority stake in Great Eastern, Singapore’s largest life insurer, and operates private banking services through the Bank of Singapore.
These moves position OCBC as a pivotal player in Southeast Asia’s financial landscape.
Wealth management has become a cornerstone of Singapore’s strategy to outpace Hong Kong.
In the first nine months of 2024, this segment contributed $2.9 billion to OCBC’s revenue.
The city-state has introduced tax incentives for single-family offices, attracting 1,650 such entities by mid-2024, up from 400 in 2020.
This influx underscores Singapore’s appeal as a destination for high-net-worth individuals and corporations seeking financial security in a volatile global market.
US-China tensions shift capital to Singapore
The escalating decoupling between the US and China has had profound implications for Hong Kong, whose economy has traditionally relied on its close ties to the mainland.
By contrast, Singapore’s perceived neutrality and stable regulatory environment have drawn capital from both sides.
Assets under management in Singapore reached $4.1 trillion in 2023, surpassing Hong Kong’s $3.9 trillion.
As US funds increasingly view Hong Kong’s financial ecosystem as risky, Singapore has emerged as the preferred alternative for capital allocation.
Trump’s policies could accelerate Singapore’s gains
The election of Donald Trump as US president could further tip the scales in favour of Singapore.
Trump’s prior administration imposed stringent sanctions and financial restrictions on China, and his re-election promises a continuation of these measures.
Such policies may compel US and European firms to withdraw from Hong Kong, redirecting their investments to Singapore.
Singapore must tread carefully to avoid potential fallout from Trump’s proposed tariffs, which could disrupt global trade and impact its export-reliant economy.
Helen Wong’s leadership cements OCBC’s position
Helen Wong, OCBC’s CEO since 2021, has steered the bank through these shifting dynamics.
With roots in Hong Kong and decades of banking experience in Greater China, Wong has leveraged her expertise to expand OCBC’s influence in both China and ASEAN markets.
Under her leadership, OCBC has prioritised wealth management, broadened its customer base in Hong Kong, and enhanced its offerings in Malaysia and Indonesia.
Wong’s leadership has also earned her recognition as one of the most powerful women in global finance, ranked 17th on the Fortune Most Powerful Women list in 2024.
Her dual focus on resilience and growth exemplifies the strategies driving Singapore’s broader financial ambitions.
Hong Kong fights back
Despite these setbacks, Hong Kong is working to reclaim its status as Asia’s financial powerhouse.
It is revitalising its IPO pipeline, aiming to attract 200 new family offices by 2025. UBS predicts Hong Kong could surpass Switzerland as the leading hub for cross-border finance by 2026.
The city’s reliance on a sluggish Chinese economy and its proximity to Beijing’s jurisdiction remain significant challenges.
Singapore, meanwhile, has taken a broader view, seeing the success of Hong Kong as complementary rather than competitive.
The city-state’s ability to tap into diverse regions without geopolitical baggage gives it an edge that Hong Kong cannot easily replicate.
Singapore’s government is already planning for the next wave of challenges.
A task force is addressing its lagging capital markets, and banks like OCBC are eyeing opportunities arising from increased Chinese manufacturing investments in Southeast Asia.
With the global trading system facing potential disruptions, Singapore’s adaptability and foresight will likely determine its financial trajectory in the years ahead.
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