Tourists visit the Merlion Statue against the backdrop of commercial buildings at Marina Bay in Singapore on July 31, 2023. Photo by AFP
Singapore is set to benefit from an exodus of investment companies leaving Hong Kong, whose status as a global financial hub has been diminishing, a report has found.
“We believe the city-state is well-positioned to attract foreign investment outflows from Hong Kong. The timely implementation of well-rounded reforms will make it an attractive destination for long-term investors,” the U.K.-based Economist Intelligence Unit (EIU) said in a recent report.
Record amounts of private wealth and capital have flowed into the city-state, thanks to its business-friendly and low-tax market regime.
New reforms on the stock market by the Singapore government, which mandate stock market participation by private funds such as family offices and allow investment pension and sovereign funds, are expected to boost investment.
EIU analysts said that as Hong Kong has been affected by China’s trade war with the U.S., foreign investment and financial experts have been leaving the city.
Difficulties in the property and technology sectors have undermined confidence in Hong Kong’s market, where the amount of money raised from initial public offerings has plunged to a 20-year low.
This gives opportunities to Singapore, where the stock market has been under-performing.
“Singapore will mop up much of the financial business that is leaving Hong Kong,” the report said.
It added that Japan and India may also gain from regional shifts. In Japan, a sound regulatory framework, well-capitalized commercial banks, and low risks to financial stability are a draw for investors.
In India, the report highlighted that the South Asian country’s stock exchanges emerged as global leaders in initial public offerings last year, with a total of 220 public issues launched, raising $6.9 billion.
