Minutes after the Associated Press declared the US presidential election for Donald Trump, the Prime Minister of Singapore, Lawrence Wong, took to social media platform X to offer his congratulations.
“I look forward to taking our partnership to greater heights,” Wong said Official account published. “We look forward to welcoming you to Singapore soon!”
The past few years have been good for Singapore, and things are getting better. The island nation occupies a key position in the region, maintaining close ties with China and the US, even as the two powers decouple their economies amid tensions.
As the latest growth in Singapore a financial center He has come often Hong Kong expensehis long-time peer and rival, who has drawn closer to Beijing in recent years. And Trump’s return to the White House could tip the scales even further towards Singapore, as the incoming president threatens to tighten the screws on China.
Trump’s election is “a net positive for Singapore, a net negative for Hong Kong,” says Devadas Krishnadas, a former Singaporean government official and CEO of consulting firm Future-Moves Group. He predicts that US funds will leave Hong Kong and its close ties to China, and instead continue to Singapore: “Singapore will be the only safe place in Asia for US and European capitals.”
Foreign capital from around the world is pouring into Singapore’s financial institutions, attracted by political stability, a light tax regime and relative neutrality. Assets under management in Singapore rose $4.1 trillion in 2023before Manage $3.9 billion in Hong Kong.
Singapore’s race with Hong Kong to become Asia’s leading financial center is led by three major banks: DBS Bank, United Overseas Bank (UOB) and OverseaChinese Banking Corp. (OCBC).
Led by CEO Helen Wong, OCBC—the oldest of the Big Three—perhaps best characterizes the country’s banking sector and best exemplifies how Singapore is navigating this new future.
“OCBC is perhaps the most representative of the banking sector in Singapore,” says Michael Makdad, senior equity analyst at Morningstar. “DBS is bigger in Greater China but less outside Singapore, while UOB has a bigger presence outside Singapore but smaller in Greater China. OCBC has both.”
Chinese capital remains an important part of OCBC’s business. Southeast Asia is China’s largest trading partner, replacing the EU in 2020. Bilateral trade between China and Southeast Asian countries is expected to reach $912 billion in 2023.
“Singapore will be seen as the only safe place in Asia for US and European capitals.”
DEVADAS KRISHNADAS, CEO, Future-Moves Group, Singapore
But China’s investment in Southeast Asia is changing, says Tommy Xie, chief China economist at OCBC. “Mining was the largest sector receiving investment from China about 10 years ago,” says Xie. “But now the fee has actually been reduced. Manufacturing is one of the biggest today.’ And much of the money is in Singapore, Xie says, accounting for just over half of all Chinese money flowing into the region.
Singapore has also become a safe haven for Chinese companies navigating an increasingly friendly world. The Southeast Asian country is a good starting point for Chinese companies trying to diversify their supply chains across the region in their “China Plus One” strategy. And some startups, for example the fast fashion Shein platformthey have quietly established their headquarters in Singapore, at least in part in the hope that a non-Chinese headquarters might be more palatable to Western investors.
If Singapore is to overtake Hong Kong as a financial hub, the cornerstone of its strategy is wealth management. The government offers tax incentives to single-family offices that set up shop in the city. As of August, there are now 1,650 such offices receiving these tax discounts, more than 400 at the end of 2020.
Ore Huiying—Bloomberg/Getty Images
Wealth management generated $2.9 billion for OCBC in the first nine months of the year. The company has named “Asian wealth” as one of its four business areas; Just over a third of the bank’s income comes from wealth management. at the beginning of the year Wong pledged to invest An additional $192 million in the cities of Hong Kong and Macau, and presented a target of 50% growth in Hong Kong assets managed by its private bank by the end of 2026.
That may be challenged by the new Trump administration. Both the first Trump administration and the Biden administration imposed sanctions and financial controls on China—first on individual companies, then on entire sectors. Expanded controls under a new Trump White House will force Singaporean banks to stop working with certain clients and sectors.
OCBC sees the retreat of US banks from Hong Kong as an opportunity to win new customers. On a trip to the Chinese city at the beginning of the yearAs Wong points out, “More and more Hong Kong customers are choosing to talk to us instead of talking to their counterparts in the West.”
OCBC’s official founding dates back to 1932, when three local banks merged in the midst of the Great Depression. The oldest of these previous banks dates back to 1912, giving OCBC more than a century of history in the Southeast Asian city.
That bank, the Commercial Bank of China, opened a branch in Xiamen—then known as Amoy—in China’s Fujian province in 1925. That branch survived the civil war and communist takeover, giving OCBC nearly a century of uninterrupted operations in China. unusual for a foreign bank.
For decades, OCBC was Singapore’s biggest bank, but it has since eclipsed DBS Bank; today it is kept around DBS $587 billion in total assetscompared to $448 billion for OCBC.
With revenue of $18.4 billion in 2023, OCBC is ranked 12th. luckthe inauguration of Southeast Asia 500 listwhich ranks the region’s largest companies by revenue. (DBS, with $25.6 billion in 2023 revenue, ranks No. 10, while UOB is No. 11 with $19.7 billion).
OCBC also owns Great Eastern, the city’s largest life insurance provider, and offers private banking through Bank of Singapore, which it bought from ING in 2009. In 2014, OCBC also acquired Wing Hang Bank, a Hong Kong bank. It is based in both Chinatown and the Greater Bay Area, a Chinese project to connect the cities of the Pearl River Delta.
62 percent of OCBC’s revenue is generated at its Singapore headquarters. A large portion of non-Singaporean income comes from two main sources. Southeast Asian markets, mainly Malaysia and Indonesia, account for 19% of the bank’s revenue; Greater China, the general term that includes mainland China, Hong Kong and the island of Taiwan, generates an additional 13%.
Helen Wong took over as CEO of OCBC in 2021, becoming the first female CEO in the bank’s history and the first woman to lead a bank in Singapore. It is number 17 Fortune’s Most Powerful Women List By 2024: Asia’s second-highest executive after Luxshare Precision Industry founder Grace Wang. Wong is also on the Fortune Most Powerful People list, at number 71.
However, Wong’s roots are in Hong Kong. Born there in 1961, St. He graduated from Paul’s College, one of the most prestigious schools in the city, then from the University of Hong Kong.
Wong’s first banking job was with OCBC as a management trainee in 1981; he quickly became the bank’s first China desk manager. He eventually moved to HSBC, starting a decade-long career that saw him become the bank’s chief executive of Greater China in 2015.
He returned to OCBC five years later, joining as its vice president and head of global wholesale banking in 2020. A year later, the board gave him the nod to be the next CEO, stating specifically. his Chinese experience.
Hong Kong remains Singapore’s closest competition. The Chinese city has been struggling in recent years due to its consequences Tough zero-covid policyConcerns about overstepping Beijing’s powers, and a China’s slow economy.
But Hong Kong officials now believe so he turned a corner and are offering new incentives to attract the world’s wealthy, with the goal of attracting 200 more family offices by the end of 2025. UBS predicts that Hong Kong could overtake Switzerland as the world’s largest hub for cross-border finance by 2026.
Hong Kong’s IPO pipeline, while far from the heights of a few years ago, is showing signs of a resurgence as are Chinese companies. Midea is a manufacturer of electrical appliances release bumper strips in the city.
Singapore’s capital markets, by comparison, are “a complete joke”, says consultant Devadas. Singapore is “not even in the same ballpark as Hong Kong”, even after the latter’s stock market took a beating due to the pandemic. In the first three quarters of the year, Singapore issued only one IPO; Hong Kong drew 45. The Singapore government has now set up an official task force to tackle the problem.
Hong Kong’s stock market is recovering he helped the city Overtaking Singapore as Asia’s top financial center in a ranking by the China Development Institute, a China-based think tank.
However, Singapore’s government is “not worried” about potential competition from Hong Kong, Devadas said. “They don’t see it as a zero-sum game.”
“What’s good for Hong Kong is good for Singapore,” Devadas says, adding that the things that support a healthy economy in Hong Kong — like a healthy economy in China — also benefit Singapore.
“But the reverse is not necessarily true,” he says. Singapore can reach out to other regions much more easily than Hong Kong, without the baggage of being tied to China.
OCBC, for its part, does not choose between the two. “Both are resilient, attractive international financial centers for international investors and businesses,” Wong wrote. luck. Hong Kong is central to the bank’s China plans; Singapore to its ASEAN expansion.
However, geopolitics could make life more difficult for Singapore, even if Washington does not directly pressure the Southeast Asian country. Trump’s promise to impose sweeping tariffs on all imports entering the US could upend the global trading system, hitting a trade-based economy like Singapore’s.
But Trump’s election also brings opportunities. Increased pressure on China will encourage more Chinese companies to invest in Southeast Asia, and give even more opportunities for Singaporean banks, such as OCBC, to benefit from these flows. “With more Chinese manufacturing coming (to the region), it should benefit a bank like us,” Wong told analysts on OCBC’s earnings call on Nov. 8, when the bank posted a record year-to-date net profit.
“Everyone comes to Singapore first to start a company,” he said.
This article appears in December 2024/January 2025: Asia the subject of luck With the title “Shifting fortunes”.
