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Singapore – Look Out, Switzerland

If you’re thinking that Hong Kong’s Asia’s premier location for wealth management, maybe you’d better think again. Today’s report from the Singapore central bank, the Monetary Authority of Singapore, reveals that the  total value  of funds managed in the country rose last year by an extraordinary 22%, reaching a record S$1.63 trillion ($1.29 trillion).

Which makes it not just the biggest centre in Asia, but not very far short of Switzerland – the world’s largest wealth management centre with an estimated $1.75 trillion in international assets at the end of 2011, or even of the UK, which has an estimated $1.69 trillion.

Tighter, Safer, Less Threatened

What’s the attraction? Apart, of course, from the fact that its highly focused micro-state characteristics do give it some decidedly Swiss-looking characteristics?

Many analysts reckon that the territory has benefited from the political situation in China, where Beijing is felt to be closing its fingers increasingly around Hong Kong. A large part of the money now coming into Singapore is being taken out of Hong Kong, for reasons that will be obvious.

Then there’s the fact that Singapore is in the middle of a regulatory tightening-up designed to clamp down on tax evasion and money laundering. And, dare we say it, that Switzerland itself is currently losing international funds because of disputes with the United States about banking secrecy – which, says Washington, is shielding US tax evaders.

At present, 80% of the country’s assets under management have their origins abroad. Conversely, 70% of AUM are invested in Asia, about 15% more than in 2012. And hedge fund assets grew by 8% last year to an estimated $77.5 billion.

Inflation Coming Under Control

In another development today, the Monetary Authority of Singapore announced that inflation is dropping back to within what it considers to be the acceptable parameters – down to less than 3% in the first half of 2013, and now likely to turn out at 2-3% during the whole year. Only last April, the MAS was expecting the rise to be 3-4%.

The Singapore authorities have been trying to cool an overheated housing market, which it says has been prompted by low global lending rates. In June the authority declared that it would try to dissuade lenders from letting borrowers get into situations where they spent more than 60% of their monthly income on debt servicing. Government sources say that housing prices have risen by nearly 60% in four years.

 

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