The eggs thrown by anti-Extradition Bill protesters at the Hong Kong Police Headquarters were not even dry yet that a crowd of Hong Kong millionaires were enquiring about opening procedures for offshore accounts in Singapore.
While the rivalry between Hong Kong and Singapore for supremacy over the Asian wealth management industry is nothing new, the latest turmoil in the Special Administrative Region of the PRC may well give the Lion City a decisive edge that had been missing so far: low political and regulatory risk. Being a full-fledged sovereign state (versus a “Special Administrative Region”) could pay off in this never-ending race…
With the 2017 disappearance of Chinese billionaire Xiao Jianhua still fresh in many Hong Kong-based High-Net-Worth Individuals’ minds, the political deadlock over Carrie Lam’s Extradition Bill has wealthy families realise that, whatever the outcome, this is the clearest message since Hong Kong’s handover that the “one-country, two-systems” principle is on life-support and that the normalisation (“PRCization”) of the territory is unavoidable.
Confident in the coming victory, the Monetary Authority of Singapore even went the extra mile by asking local wealth managers “not to deprecate Hong Kong publicly because of the demonstrations”. Winning with style, indeed…
Picture credits: Naufal Ashiblie/LinkedIn.com
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We need to be reminded that Singapore is also a highly authoritarian state. What is being confused here is that foreign investors want "stability", not "democracy". HK is messing with its own "stability" in order to to gain more "democracy" . Good for them. But the fact that HK is less than a state is not the reason why capital is fleeing now.
Thank you Victoria for your comment. Let me just remind you that this trend doesn't concern foreign investors, but domestic ones (Hong Kong-based wealthy families, to be exact). In terms of where they are putting their money, it is indeed stability (and predictability) that they are looking for, rather than democracy. Sad maybe, but a fact. Money goes where the laws are strong and stable, rather than where people can express themselves freely.
What interests me here is how a social movement affects the attractiveness of an economy, regardless of whether I agree with this movement or not. This blog is about observing how economic power expresses itself in Asia-Pacific. In this story, the anti-Extradition movement appears to give (un-intentionally) a serious edge to Singapore in the race with Hong Kong for leadership of the Asian wealth management industry. Economic & information warfare is what this blog is about.
Finally, the fact that Singapore is a full-fledged State while HK is only a SAR of the PRC is of great importance. The Singapore government doesn't have to take its orders from somewhere else, at least not as blatantly as the Hong Kong SAR government. The Singapore PM answers to local interest groups (and we could discuss extensively about the amount of influence it has over these groups...), while the Hong Kong SAR government has to answer ultimately to Beijing, while being supposed to represent local interests. When it comes to ensuring transparency and stability of the legal system, this is hardly an enviable position...