The economic crisis has focused the global banking world into an area where excitement was already strong. Pretty much everyone now agrees that Asia is where everything is happening. And Singapore, as one of the most well-established markets, is reaping the benefits.
The economic crisis has focused the global banking world into an area where excitement was already strong. Pretty much everyone now agrees that Asia is where everything is happening. And Singapore, as one of the most well-established markets, is reaping the benefits.
The opportunities in Asia continue to grow, both in established markets such as Hong Kong and Japan, as well as the newer economies of Vietnam and its neighbours. Meanwhile, the Chinese authorities appear constantly on the verge of further liberalisation - an event fund managers are already salivating over
Since full independence in 1965, Singapore has gone from strength to strength. A stable government that has long concentrated on ensuring the legal, technological and infrastructure resources are in line with the requirements of international investors.
As one of the four Asian Tigers - along with Hong Kong, South Korea and Taiwan - Singapore’s population is educated and highly regarded as efficient and comparatively low-cost compared to other financial centres. It’s now considered the fourth largest financial centre in the world.
Singapore is enjoying growth from all quarters. Domestically, savings are rising and institutional investment has had a relatively successful couple of years. As one of the safest jurisdictions in the world, let alone in Asia, it has also attracted regional and international investors looking for a flight to quality.
“Singapore has one of the best reputations of any domicile anywhere in the world,” says local consultant John Ng. The government has good relations with most of the rest of the world, and it has made it a priority to remain a centre that is attractive to the global investment community. This is combined with a wealthy local populace who are comfortable with making investments through the many funds on offer to locals.”
Technically, Singapore cannot be beaten. Its electronic infrastructure means that communication is fast and easy, with built-in failsafes for if anything ever does go wrong. It has a highly educated and motivated workforce, a low tax environment and a Western outlook when it comes to language and culture.
The Government has been open about its ambitions to become the world’s leading hub for wealth management. It has a number of tax exemption and financial incentive schemes, which, combined with a programme of public education, means investors are becoming increasingly sophisticated when it comes to the instruments they are using. Even though the world’s financial markets have become relatively cautious in recent years, Singaporean providers continue to innovate.
So it’s not surprising that most of the major global financial players consider the country a key part of their servicing portfolio. Citi, HSBC, Northern Trust and others all have a significant presence, bolstered by Asian specialists such as Standard Chartered. This is backed up by the likes of BNP Paribas and State Street Global Investors, who may not have been in the market for long but have already established themselves as major players.
Others have ramped up their offering in the country. In 2007 BNY Mellon launched a transfer agency operation. Within months it had become a market leader in terms of quality and it didn’t take too long for the client list to grow substantially.
All of this has drawn the asset managers. While the likes of HSBC have traditionally viewed Hong Kong as the main centre for their Asian operations, many fund managers now consider Singapore to be at least equally important. European asset managers are building a footprint in the country, aiming to both benefit their home clients from the growth in the market and encourage local investors to take advantage of their global expertise.
Of at least equal importance are the sovereign wealth funds. Singapore itself is a wealthy nation, with a lot of money to invest, and the Government makes no secret of doing its best to ensure as much of the work is done in the country as possible. But funds from other Asian countries, as well as further afield - Gulf states in particular - also like the operating environment of the island. This has not gone unnoticed by the banks - BNY Mellon has just established a sovereign institutions group focused on supporting sovereign wealth funds, sovereign pension plans, central banks and sovereign owned entities.
The new group will be led by Jai Arya, formerly head of client management in Asia-Pacific, who will continue to be based in Singapore. Arya has been with BNY Mellon for over two years working in India, Taiwan, Korea and Singapore.
“With total sovereign wealth fund assets forecast to more than triple by 2020 to $20 trillion, sovereign institutions are critical to the continuing health of the global financial system,” said Jim Palermo, vice chairman of BNY Mellon and chief executive officer of global client management.
“As sovereigns steadily diversify their portfolios through strategic overseas investments, BNY Mellon is ideally placed to provide the asset management and securities servicing solutions they need to help them seize new opportunities and manage risk in the global markets.”
Hedge funds have also been making their mark in Singapore. At the start of the millennium, there was little hedge fund activity in the market, but several now have operations centres on the ground, bringing with them money from Europe and the Americas, as well as attracting local interest.
It’s kind of a chicken and egg situation, but whether its as a result of the hedge funds’ interest or forward thinking by some of the bigger players means that there is now an innovative and all-encompassing service industry for their needs. Morgan Stanley, for example, has a presence, as do Custom House, Swiss Financial Services and many others.
China
The shadow on the horizon in Asia is the market that everyone is waiting for: China. While many experts have traditionally believed a base in Hong Kong is the preferred option for preparing for the Chinese market, Singaporean businesses have taken their fair share.
Even those banks that now have a Chinese licence and offices on the ground, still use their operations centres in Singapore to service any of the business they get. As the opportunities grow, Singapore is confident that it will increase its share of the Chinese business on offer.
“Hong Kong offices will of course get a lot of business,” says Ng. “But I wouldn’t write off Singapore, particularly in the wealth management sector. It has a great reputation amongst Asian high net worth individuals and there will certainly be flows in that direction. The other thing of course is that Singapore has the expertise to quickly gear up to large inflows, so when the money does start to flow it will be ready.”
