Mere minutes after the Related Press declared the U.S. presidential election for Donald Trump, Singapore’s prime minister, Lawrence Wong, took to the social media platform X to supply his congratulations.
“I look forward to taking our partnership to even greater heights,” Wong’s official account posted. “We hope to welcome you back to Singapore soon!”
The previous few years have been good for Singapore, and issues stand to get higher. The island nation occupies a key place within the area, sustaining shut ties to China and the U.S. at the same time as the 2 powers decouple their economies amid rising tensions.
Singapore’s latest progress as a monetary heart has typically come on the expense of Hong Kong, its longtime peer and rival that has been pulled nearer to Beijing in recent times. And the return of Trump to the White Home might tip the scales even additional towards Singapore, because the incoming president threatens to tighten the screws on China.
Trump’s election is a “net positive for Singapore, net negative for Hong Kong,” says Devadas Krishnadas, a former Singapore authorities official and CEO of the Future-Strikes Group, a consulting agency. He predicts U.S. funds will draw back from Hong Kong and its shut hyperlinks to China, and as an alternative proceed their march to Singapore: “Singapore will be seen as the only safe place in Asia for U.S. and European capital.”
International capital from around the globe is speeding into Singapore’s monetary establishments, attracted by political stability, a lenient tax regime, and relative neutrality. Property beneath administration in Singapore rose to $4.1 trillion in 2023, forward of the $3.9 trillion managed in Hong Kong.
Singapore’s race with Hong Kong to be the preeminent monetary heart of Asia is led by its Large Three banks: DBS Financial institution, United Abroad Financial institution (UOB), and OverseaChinese Banking Corp. (OCBC).
Led by CEO Helen Wong, OCBC—the oldest of the Large Three—maybe finest characterizes the nation’s banking sector and finest reveals how Singapore navigates this new future.
“OCBC is maybe the most representative of the Singapore banking sector,” says Michael Makdad, senior fairness analyst at Morningstar. “DBS is larger in Greater China, but less outside Singapore, whereas UOB has a larger presence outside Singapore but less in Greater China. OCBC has both.”
Chinese language capital stays a serious a part of OCBC’s enterprise. Southeast Asia is China’s largest buying and selling associate, having changed the EU in 2020. Bilateral commerce between China and Southeast Asian international locations reached $912 billion in 2023.
“Singapore will be seen as the only safe place in Asia for U.S. and European Capital.”
DEVADAS KRISHNADAS, CEO, Future-Strikes Group — Singapore
However China’s funding in Southeast Asia is altering, says Tommy Xie, OCBC’s chief China economist. “Mining used to be the largest sector receiving investment from China around 10 years ago,” Xie says. “But now the share has really diminished. Manufacturing is one of the largest right now.” And far of the cash is in Singapore, which Xie says accounts for simply over half of the Chinese language cash flowing into the area.
Singapore has additionally turn into a secure haven for Chinese language corporations navigating an more and more unfriendly world. The Southeast Asian nation is an effective launching level for Chinese language corporations making an attempt to diversify their provide chains all through the area in a “China Plus One” technique. And a few startups, like fast-fashion platform Shein, have quietly established headquarters in Singapore due, not less than partially, to hopes {that a} non Chinese language residence base could be extra palatable to Western buyers.
If Singapore goes to surpass Hong Kong as a monetary hub, core to its technique is wealth administration. The federal government presents tax incentives to single-family workplaces that arrange store within the metropolis. As of August, there are actually 1,650 such workplaces receiving these tax breaks, up from 400 on the finish of 2020.
Ore Huiying—Bloomberg/Getty Pictures
Wealth administration generated $2.9 billion for OCBC within the first 9 months of the yr. The corporate has designated “Asian wealth” as one among its 4 enterprise areas; simply over a 3rd of the financial institution’s revenue is derived from wealth administration. Earlier this yr, Wong pledged to speculate an extra $192 million within the cities of Hong Kong and Macau, and its personal financial institution unveiled a goal to develop Hong Kong property beneath administration by 50% by the tip of 2026.
That may very well be challenged by the brand new Trump administration. Each the primary Trump administration and the Biden administration imposed sanctions and monetary controls on China—first on particular person corporations, then on complete sectors. Expanded controls beneath a brand new Trump White Home will drive Singapore’s banks to cease working with sure clients and sectors.
OCBC sees the pullback of U.S. banks from Hong Kong as a chance to win new clients. Throughout a visit to the Chinese language metropolis earlier this yr, Wong famous that “more and more of the Hong Kong customers choose to talk to us, instead of talking to their Western counterparts.”
OCBC’s official founding dates to 1932, when three native banks merged amid the Nice Despair. The oldest of these predecessor banks dates to 1912, giving OCBC over a century’s price of historical past within the Southeast Asian metropolis.
That very same financial institution, Chinese language Industrial Financial institution, opened a financial institution department in Xiamen—then referred to as Amoy—in China’s Fujian province in 1925. That department survived by the civil conflict and the Communist takeover, giving OCBC nearly a century of uninterrupted operations in China, uncommon for a overseas financial institution.
For many years, OCBC was the biggest of Singapore’s banks, however it’s since been eclipsed by DBS Financial institution; as we speak DBS holds round $587 billion in whole property, in contrast with $448 billion for OCBC.
With $18.4 billion in income in 2023, OCBC ranks No. 12 on Fortune’s inaugural Southeast Asia 500 checklist, which ranks the area’s largest corporations by income. (DBS, with $25.6 billion in 2023 income, sits at No. 10, whereas UOB is No. 11 with $19.7 billion.)
OCBC additionally holds a majority stake in Nice Japanese, the town’s largest life insurance coverage supplier, and presents personal banking by the Financial institution of Singapore, acquired from ING in 2009. In 2014, OCBC additionally snapped up Wing Grasp Financial institution, a Hong Kong financial institution, giving it a foothold in each the Chinese language metropolis and the Better Bay Space, a Chinese language mission to knit collectively the cities of the Pearl River Delta.
Sixty-two p.c of OCBC’s income is generated in its residence base of Singapore. A lot of its non-Singaporean income comes from two main sources. Southeast Asian markets, primarily Malaysia and Indonesia, contribute 19% of the financial institution’s income; Better China, a catch-all time period that encapsulates mainland China, Hong Kong, and the island of Taiwan, generates an extra 13%.
Helen Wong took over as OCBC’s CEO in 2021, the primary feminine chief government within the financial institution’s historical past and the primary girl to steer a Singaporean financial institution. She is No. 17 on the Fortune Most Highly effective Ladies checklist for 2024: the second-highest-ranking government from Asia, after Luxshare Precision Trade founder Grace Wang. Wong can also be on the inaugural Fortune Most Highly effective Individuals checklist, at No. 71.
But Wong’s roots lie in Hong Kong. Born there in 1961, she graduated from St. Paul’s School, one of many metropolis’s most prestigious colleges, then from the College of Hong Kong.
Wong’s first banking job was with OCBC, as a administration trainee, in 1981; she rapidly turned the financial institution’s first China desk supervisor. She ultimately moved to HSBC, beginning a decades-long profession that culminated in changing into the financial institution’s chief government for Better China in 2015.
She returned to OCBC 5 years later, becoming a member of as its deputy president and head of world wholesale banking in 2020. A yr later, the board gave her the nod to turn into the following chief government, particularly pointing to her China expertise.
Hong Kong stays Singapore’s closest competitors. The Chinese language metropolis has struggled in recent times owing to the aftereffects of its robust COVID-zero coverage, considerations over Beijing’s encroaching jurisdiction, and a sluggish Chinese language economic system.
However Hong Kong officers now assume they’ve turned a nook and are providing new incentives to draw the world’s rich, with a objective of luring 200 extra household workplaces by the tip of 2025. UBS predicts Hong Kong might overtake Switzerland because the world’s largest hub for cross-border finance as early as 2026.
Hong Kong’s IPO pipeline, whereas removed from the highs of only a few years in the past, can also be exhibiting indicators of a revival as Chinese language corporations like equipment producer Midea launch bumper listings within the metropolis.
Singapore’s capital markets, by comparability, are “a complete joke,” says Devadas, the advisor. Singapore “is not even in the same ballpark as Hong Kong,” even after the latter’s inventory market took a beating within the wake of the pandemic. Within the first three quarters of the yr, Singapore drew only one IPO; Hong Kong drew 45. Singapore’s authorities has now arrange an official activity drive to deal with the issue.
Hong Kong’s recovering inventory market helped the town overtake Singapore as Asia’s main monetary heart on a rating from the China Improvement Institute, a China-based assume tank.
But Singapore’s authorities is “unconcerned” about potential competitors from Hong Kong, Devadas says. “They don’t see it as a zero-sum game.”
“What’s good for Hong Kong is good for Singapore,” Devadas says, noting that the issues that help a wholesome Hong Kong economic system—like a wholesome Chinese language economic system—profit Singapore, too.
“But the reverse isn’t necessarily true,” he says. Singapore can faucet into different areas way more simply than Hong Kong can, with out the bags of being tied to China.
OCBC, for its half, isn’t selecting between the 2. “They are both resilient, international financial centers attractive to international investors and businesses,” Wong writes to Fortune. Hong Kong is essential to the financial institution’s China plans; Singapore to its ASEAN enlargement.
Nonetheless, geopolitics might make life trickier for Singapore, even when Washington doesn’t stress the Southeast Asia nation straight. Trump’s promise to impose broad tariffs on all imports coming into the U.S. might upend the worldwide buying and selling system, hitting a trade-focused economic system like Singapore’s.
However Trump’s election additionally brings alternatives. Better stress on China will encourage extra Chinese language corporations to spend money on Southeast Asia—and supply much more alternatives for Singapore’s banks, like OCBC, to learn from these flows. “With more Chinese manufacturing coming [to the region], it must benefit a bank like us,” Wong instructed analysts throughout OCBC’s earnings name on Nov. 8, when the financial institution unveiled file web income for the yr to date.
“Everyone comes to Singapore first to start a company,” she stated.
This text seems within the December 2024/January 2025: Asia difficulty of Fortune with the headline “Shifting fortunes.”
