Yahoo! Finance: Singapore Leads Hong Kong in Wealth Management, but Gap Closing
By Sam Holmes | The Wall Street Journal – Wed, Sep 19, 2012 3:34 PM SGT
Singapore has a healthy head start on rival Hong Kong in the race to become Asia’s top wealth management center, according to a new report on wealth in Asia. The Chinese territory is taking steps to catch up, but Singapore’s allure as a safe haven for wealth continues to attract a lot of private investment from Greater China.
The importance of these two cities as offshore banking centers has grown, especially as regulators and institutions continue to carve out distinctions between the high net worth segment of the banking market and the mass affluent, typically defined as people with US$100,000 or more in investable assets.
“At present, Singapore might have a slight edge over Hong Kong…but Hong Kong is taking steps to bridge that gap,” RBC Wealth Management Head of Emerging Markets Barend Janssens said at a briefing on the Asia Pacific Wealth Report, released by consulting group Capgemini and the Canadian firm.
The report highlighted generally tough conditions for the industry in 2011, when a weak performance for stock markets ate into wealth of the region’s rich, even as more people joined the ranks of the wealthy. Asia’s population of high net worth individuals–those with investable assets of US$1 million or more–rose 1.6% in 2011 from 2010 to 3.4 million, though the pool of wealth declined 1.1% to US$10.7 trillion.
But the Southeast Asian city in 2011 overtook Hong Kong on both those measures, with 91,000 high net worth individuals with a combined US$439 billion compared to Hong Kong’s 89,000 with US$408 billion. In 2010 Singapore had 99,000 people with US$453 billion in savings while Hong Kong had 101,000 with US$511 billion.
The report identified ways in which Singapore has taken the lead over Hong Kong. Among them, it credited Singapore’s single regulatory body and more predictable and transparent legal framework. Hong Kong has multiple regulatory bodies and its financial market policies are less developed, the report said.
Singapore’s status as a fully independent nation was also seen as a big plus compared with Hong Kong, which is perceived as being under the influence of mainland China authorities.
Mr. Janssens said Singapore’s reputation as a haven against “country risk” perceived in other jurisdictions across Asia was a draw, especially among investors from mainland China and Taiwan. He said his bank has continued to see growth in the number of investors from Greater China parking assets in Singapore.
However, Hong Kong’s robust capital markets are considered to be an advantage–compared with more modest volumes seen in Singapore–and its regulatory framework is expected to change to meet the growing demands of the wealth industry.
The Capgemini-RBC report, which followed the publication of a report in June on global high net wealth trends, comes as industry interest in Asian wealth intensifies. A number of organizations have in recent months released studies on growing affluence in the region, with particular attention paid to Singapore’s role as a private banking hub.
Earlier this year, Boston Consulting Group’s Wealth Report said Singapore has the highest percentage of millionaire households in the world, a title the country has held for two years running.
A report on global high-net-worth trends, released earlier this week by wealth-research group Wealth-X, showed Indonesia bucked a wider contraction in wealth, both globally and in Asia, in 2012.
This article originally appeared in The Wall Street Journal Asia.