Just minutes after the Associated Press declared the US presidential election for Donald Trump, Singapore’s Prime Minister Lawrence Wong took to social media platform X to offer his congratulations.
“I look forward to taking our partnership even further,” says Wong official account posted. “We hope to welcome you back to Singapore soon!”
The last few years have been good for Singapore and things are only getting better. The island nation occupies a key position in the region and maintains close ties with China and the United States, even as the two powers decouple their economies amid rising tensions.
Singapore’s recent growth as a financial center has been there many times Cost from Hong Kongits long-time competitor and rival, which has moved closer to Beijing in recent years. And Trump’s return to the White House could tip the scales even further for Singapore as the new president threatens to tighten the screws on China.
Trump’s election is “a net positive for Singapore, a negative net for Hong Kong,” said Devadas Krishnadas, a former Singapore government official and CEO of Future-Moves Group, a consulting firm. He predicts that US funds will avoid Hong Kong and its close ties to China and instead continue their march to Singapore: “Singapore is seen as the only safe place in Asia for US and European capital.”
Foreign capital from around the world is pouring into Singapore’s financial institutions, attracted by political stability, a lenient tax system and relative neutrality. Assets under management in Singapore rose $4.1 trillion in 2023before the $3.9 trillion under management in Hong Kong.
Singapore’s race with Hong Kong to become Asia’s preeminent financial center is led by its 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 demonstrates how Singapore is navigating this new future.
“OCBC is perhaps the most representative banking sector in Singapore,” says Michael Makdad, senior equity analyst at Morningstar. “DBS is larger in Greater China but less present outside Singapore, while UOB is larger outside Singapore but less present in Greater China. OCBC has both.”
Chinese capital remains an important part of OCBC’s business. Southeast Asia is China’s largest trading partner and replaced the EU in 2020. Bilateral trade between China and Southeast Asian countries reached $912 billion in 2023.
“Singapore is viewed as the only safe place in Asia for U.S. and European capital.”
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,” Xie says. “But now the percentage has really gone down. The manufacturing sector is one of the largest right now.” And much of the money is in Singapore, accounting for just over half of the Chinese money flowing into the region, according to Xie.
Singapore has also become a safe haven for Chinese companies navigating an increasingly unfriendly world. The Southeast Asian country is a good starting point for Chinese companies looking to diversify their supply chains across the region as part of a “China Plus One” strategy. And some startups, like Fast fashion platform Sheinhave quietly set up their headquarters in Singapore, at least partly out of the hope that a non-Chinese home base might be more attractive to Western investors.
If Singapore wants to overtake Hong Kong as a financial hub, asset management is at the core of its strategy. The government offers tax incentives for single family offices setting up in the city. As of August there is now 1,650 such offices These tax breaks have increased, there were still 400 at the end of 2020.
Ore Huiying – Bloomberg/Getty Images
Asset management generated $2.9 billion for OCBC in the first nine months of the year. The company has declared “Asian Wealth” as one of its four divisions; Just over a third of the bank’s income comes from asset management. Earlier this year Wong promised to invest an additional $192 million in the cities of Hong Kong and Macau, and its private bank announced a goal of increasing Hong Kong’s assets under management by 50% by the end of 2026.
This could be challenged by the new Trump administration. Both the first Trump administration and the Biden administration imposed sanctions and financial controls against China – first on individual companies, then on entire sectors. Expanded controls under a new Trump White House will force Singapore’s banks to stop working with certain customers and sectors.
OCBC sees the withdrawal of US banks from Hong Kong as an opportunity to win new customers. During a trip to the Chinese city Earlier this yearWong noted that “more and more Hong Kong customers prefer to talk to us rather than their Western counterparts.”
OCBC’s official founding dates back to 1932, when three local banks merged in the midst of the Great Depression. The oldest of these predecessor banks dates back to 1912, giving OCBC over a century of history in the Southeast Asian city.
The same bank, the Chinese Commercial Bank, opened a bank branch in Xiamen – then known as Amoy – in China’s Fujian Province in 1925. This branch survived the civil war and communist takeover, providing OCBC with nearly a century of uninterrupted business operations in China. rare for a foreign bank.
For decades, OCBC was Singapore’s largest bank, but has now been eclipsed by DBS Bank. Today DBS is going strong Total assets: $587 billioncompared to $448 billion for OCBC.
With revenue of $18.4 billion in 2023, OCBC ranks 12th Assetsis opening ceremony Southeast Asia 500 Listwhich lists the region’s top-selling companies. (DBS is ranked No. 10 with 2023 revenue of $25.6 billion, while UOB is No. 11 with $19.7 billion.)
OCBC also owns a majority stake in Great Eastern, the city’s largest life insurance provider, and offers private banking through Bank of Singapore, which was acquired by ING in 2009. In 2014, OCBC also bought Wing Hang Bank, a Hong Kong-based bank that has a foothold in both the Chinese city 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 in its home base of Singapore. Much of its revenue outside Singapore comes from two main sources. The Southeast Asian markets, primarily Malaysia and Indonesia, contribute 19% to the bank’s revenue; “Greater China,” an umbrella term that includes mainland China, Hong Kong and the island of Taiwan, generates another 13%.
Helen Wong took over as CEO of OCBC in 2021, the first female chief executive in the bank’s history and the first woman to lead a Singaporean bank. She is No. 17 on the Fortune’s Most Powerful Women List for 2024: the second highest ranking executive from Asia after Luxshare Precision Industry founder Grace Wang. Wong is also on Fortune’s inaugural list of most powerful people at number 71.
But Wong’s roots lie in Hong Kong. She was born there in 1961 and graduated from St. Paul’s College, one of the city’s most prestigious schools, and then the University of Hong Kong.
Wong’s first banking job was as a management trainee at OCBC in 1981; She quickly became the bank’s first China desk manager. She eventually moved to HSBC and began a decade-long career that culminated in her becoming the bank’s managing director for Greater China in 2015.
Five years later, she returned to OCBC, joining in 2020 as deputy president and head of global wholesale banking. A year later, the board gave her the promise to become the next managing director and explicitly stated this their China experience.
Hong Kong remains Singapore’s biggest competitor. The Chinese city has struggled in recent years due to the aftermath strict COVID zero policyConcerns about Beijing’s intervention sovereignty and a sluggish Chinese economy.
But Hong Kong officials now believe they did has turned a corner and offer new incentives to attract the world’s rich, with the goal of attracting 200 more family offices by the end of 2025. UBS expects Hong Kong could overtake Switzerland as the world’s largest hub for cross-border financing as early as 2026.
While Hong Kong’s IPO pipeline is far from the highs of a few years ago, it is also showing signs of the revival desired by Chinese companies Device manufacturer Midea Introducing bumper offers in the city.
In comparison, Singapore’s capital markets are “a complete joke,” says Devadas, the consultant. Singapore “isn’t even at the same level as Hong Kong,” even after its stock market suffered a setback amid the pandemic. In the first three quarters of the year, Singapore recorded just one IPO; In Hong Kong there were 45. Singapore’s government has now set up an official task force to tackle the problem.
Hong Kong’s stock market is recovering helped the city Singapore overtook Singapore as Asia’s top financial center in a ranking by the China Development Institute, a China-based think tank.
Still, the Singapore government is “not worried” about possible competition from Hong Kong, says Devadas. “They don’t see it as a zero-sum game.”
“What is good for Hong Kong is good for Singapore,” says Devadas, pointing out that the things that support a healthy Hong Kong economy – like a healthy Chinese economy – also benefit Singapore.
“But the opposite is not necessarily the case,” he says. Singapore can develop 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, international financial centers that are attractive to international investors and companies,” writes Wong Assets. Hong Kong is key to the bank’s China plans; Singapore on its ASEAN expansion.
Still, geopolitics could make Singapore’s life more difficult, even if Washington does not directly pressure the Southeast Asian country. Trump’s promise to impose sweeping tariffs on all imports entering the United States could upend the global trading system and hit a trade-driven economy like Singapore’s.
But Trump’s election also brings opportunities. Greater pressure on China will encourage more Chinese companies to invest in Southeast Asia – and provide Singapore banks like OCBC with even more opportunities to benefit from these capital flows. “As more Chinese production comes [to the region]it has to benefit a bank like us,” Wong told analysts during OCBC’s earnings call on Nov. 8, when the bank reported record year-to-date net profits.
“Everyone comes to Singapore first to start a business,” she said.
This article appears in the December 2024/January 2025: Asia Edition of Assets with the headline “Shifting Fortunes.”