Minutes after the Associated Press announced the election of US President Donald Trump, the Prime Minister of Singapore, Lawrence Wong, took to the X website to express his gratitude.
“I hope to take our cooperation to the next level,” Wong’s A valid account has been sent. “We hope to welcome you back to Singapore soon!”
The past few years have been good for Singapore, and things are looking up. The island nation is at the forefront of the region, maintaining close ties with China and the US even as the two powers are winding down their economies in the wake of the crisis.
Singapore’s recent growth if financial center often come to the price of Hong Kongan old friend and rival who has grown increasingly close to Beijing in recent years. And Trump’s return to the White House could tip the scales in Singapore, with the incoming president threatening to tighten ties with China.
Trump’s election is “good for Singapore, not good for Hong Kong,” said Devadas Krishnadas, a former Singaporean civil servant and CEO of Future-Moves Group, a consulting firm. He predicts that US investment will leave Hong Kong with its close ties to China, and instead continue its journey to Singapore: “Singapore will be seen as the only safe place in Asia for the capital of the US and Europe.”
Foreign capital from around the world is flocking to Singapore’s financial institutions, attracted by its political stability, tax controls, and political neutrality. Assets under control in Singapore rose to $4.1 trillion in 2023ahead of $3.9 trillion managed in Hong Kong.
Singapore and Hong Kong’s race to become Asia’s financial center is led by its Big Three banks: DBS Bank, United Overseas Bank (UOB), and OverseaChinese Banking Corp. (OCBC).
Under the leadership of CEO Helen Wong, OCBC – the largest of the Big Three – is perhaps the best known of the country’s banks and best reflects Singapore’s approach to this new future.
“OCBC is probably the most representative of Singapore banks,” said Michael Makdad, chief economist at Morningstar. “DBS is big in Greater China, but smaller outside Singapore, while UOB has a bigger presence outside Singapore but smaller in Greater China. OCBC has both.”
Capital China remains a major part of OCBC’s business. Southeast Asia is China’s largest trading partner, replacing the EU in 2020. Trade between China and Southeast Asian countries will reach $912 billion in 2023.
“Singapore will be seen as the only safe haven in Asia for the US and European Capital.”
DEVADAS KRISHNADAS, CEO, Future-Moves Group – Singapore
But China’s investment in Southeast Asia is changing, said Tommy Xie, OCBC’s chief financial officer in China. “Mining was the biggest source of investment from China about 10 years ago,” says Xie. But now the share is much less. Design is one of the biggest trends right now. ” And most of the money is in Singapore, which Xie says uses half of all Chinese money flowing into the region.
Singapore has also become a safe haven for Chinese companies moving into the increasingly globalized world. Southeast Asia is a good starting point for Chinese companies that are trying to transform their supply chains across the region in a “China Plus One” way. And some basics, like Fast platform Sheinthey have quietly set up headquarters in Singapore because, perhaps in part, they hope that non-Chinese real estate will be attractive to Western investors.
If Singapore is to overtake Hong Kong as a financial center, a key step in its strategy is to improve the economy. The government offers tax incentives to single-family businesses that set up shop in the city. Starting in August, they are available now 1,650 such offices receive these taxes, from 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 chosen “the Asian economy” as one of its four business areas; more than a third of the bank’s income comes from asset management. Earlier this year, Wong promised to sell it an additional $192 million in the cities of Hong Kong and Macau, and its private bank revealed a target to expand Hong Kong’s economy 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 economic controls on China – first at individual companies, then at whole groups. Increased regulation under the new Trump White House will force Singapore banks to stop working with customers and other sectors.
OCBC sees the withdrawal of US banks from Hong Kong as an opportunity to win new customers. On a trip to a Chinese city earlier this yearWong said that “many Hong Kong customers choose to talk to us, rather than their Western counterparts.”
OCBC’s origins date back to 1932, when three local banks merged in the midst of the Great Depression. The oldest of its predecessor banks dates back to 1912, giving OCBC over a century of history in the Southeast Asian capital.
The same bank, Chinese Commercial Bank, 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 almost a century of uninterrupted service in China. . rare in a foreign bank.
For many years, OCBC was the largest bank in Singapore, but was eclipsed by DBS Bank; today DBS works around $587 billion in total assetswith respect to $448 billion for OCBC.
With a revenue of $18.4 billion in 2023, OCBC is ranked 12th on Chance‘s opening Southeast Asia 500 listwhich invests the largest companies in the region. (DBS, with $25.6 billion in revenue by 2023, sits at No. 10, while UOB is No. 11 with $19.7 billion.)
OCBC also has a majority stake in Great Eastern, the city’s largest life insurance company, and offers private banking through Bank of Singapore, which was acquired from ING in 2009. In 2014, OCBC also acquired Wing Hang Bank, a Hong Kong bank. Kong is based in China and the Greater Bay Area, China’s project to integrate the cities of the Pearl River Delta.
Sixty-two-quarters of OCBC’s revenue is generated at home in Singapore. Most of its non-Singaporean income comes from two main sources. Southeast Asian markets, particularly Malaysia and Indonesia, contribute 19% of the bank’s revenue; Greater China, an inclusive term that encompasses all of China, Hong Kong, and the island of Taiwan, is generating an additional 13%.
Helen Wong took over as CEO of OCBC in 2021, the first female CEO in the bank’s history and the first woman to lead a Singapore bank. He is the No. 17 on Fortune Most Powerful Women list for 2024: the second largest executive from Asia, after the founder of Luxshare Precision Industry Grace Wang. Wong is also on the first Fortune Most Powerful People list, at number 71.
However, Wong’s roots are in Hong Kong. He was born there in 1961, and graduated from St.
Wong’s first banking job was with OCBC, as a management trainer, in 1981; quickly became the number one desk manager in China. He later moved to HSBC, beginning a career that spanned several decades until he became the bank’s head of Greater China in 2015.
He returned to OCBC after five years, becoming vice president and head of global banking in 2020. A year later, the board agreed to become its next chief executive, directly to his Chinese experience.
Hong Kong remains Singapore’s closest competitor. The Chinese city has suffered in recent years as a result the critical point of COVID-zeroconcerns about Beijing’s intervention, and a China’s sluggish economy.
But Hong Kong officials now think they will he turned the corner and they are offering new incentives to attract the world’s wealthy, with the aim of attracting another 200 family offices by the end of 2025. UBS predicts that Hong Kong may overtake Switzerland as the world’s capital of the border economy from the year 2026.
Hong Kong’s IPO pipeline, while far from what it was a few years ago, is also showing a revival in the way Chinese companies like it. equipment manufacturer Midea start a big list in the city.
Singapore’s stock market, by comparison, is “a complete joke,” says Devadas, the consultant. Singapore is “not in the same ballpark as Hong Kong,” even after the latter market took a hit due to the pandemic. In the first three years of the year, Singapore attracted only one IPO; Hong Kong attracted 45 people. The Singapore government has now set up a task force to deal with the problem.
Hong Kong stock market he helped the city it overtook Singapore as Asia’s financial center in a ranking from the China Development Institute, a Chinese think tank.
However, the Singapore government is “not concerned” about potential competition from Hong Kong, says Devadas. “They don’t see it as a zero-sum game.”
“What’s good for Hong Kong is good for Singapore,” Devadas says, noting that factors that support Hong Kong’s economy – such as China’s healthy economy – also benefit Singapore.
He said: “But the difference is not true.” Singapore can enter other regions more easily than Hong Kong, without Chinese-built assets.
OCBC, for its part, does not choose between the two. “Both are stable, global financial centers attractive to international investors and businesses,” Wong wrote. Chance. Hong Kong is the key to China’s banking plans; Singapore to its ASEAN expansion.
However, geopolitics can make life difficult for Singapore, even if Washington pushes the Southeast Asian country directly. Trump’s promise to impose higher tariffs on all goods entering the US could further damage global trade, damaging trade-oriented economies like Singapore.
But Trump’s election also brings opportunity. A strong crackdown on China will encourage more Chinese companies to invest in Southeast Asia—and provide more opportunities for Singaporean banks, such as OCBC, to capitalize on this. “A lot of Chinese manufacturing is coming [to the region]it should benefit a bank like us,” Wong told analysts at OCBC’s earnings call on Nov. 8, when the bank unveiled its year-to-date profit record.
“Everyone comes to Singapore first to start a company,” he said.
This article is available in December 2024/January 2025: Asia the story of Chance with the title “Changing opportunities.”
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