Trump’s victory could make life harder for Hong Kong, and that could be good news for Singapore banks

“I look forward to taking our partnership to even greater heights,” Wong said. Official account posted. “We hope to welcome you back to Singapore soon!”

The past few years have been good for Singapore and things are gradually getting better. The island nation occupies a key position in the region, maintaining close ties with China and the US even as the two powers decouple their economies amid rising tensions.

Singapore’s recent growth a financial center came often Hong Kong costsIts longtime colleague and rival has been drawn closer to Beijing in recent years. And Trump’s return to the White House could tip the balance even more toward Singapore, with the incoming president threatening to tighten sanctions on China.

Devadas Krishnadas, a former Singapore government official and CEO of Future-Moves Group, a consulting firm, said Trump’s election was “positive for Singapore and negative for Hong Kong”. He predicts US funds will stay away from Hong Kong and its close links to China, and instead continue to attack Singapore: “Singapore will be seen as the only safe place in Europe.” Asia to US and European capital”.

Foreign capital from around the world is flocking to Singapore’s financial institutions, attracted by its political stability, lenient tax regime and relative neutrality. Assets under management in Singapore increased 4.1 trillion USD by 2023before $3.9 trillion under management in Hong Kong.

Singapore’s race with Hong Kong to become Asia’s preeminent financial center is led by three major banks: DBS Bank, United Oversea Bank (UOB) and Oversea Chinese Banking Corp. (OCBC).

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Led by CEO Helen Wong, OCBC—the oldest of the Big Three—is perhaps the most defining feature of the country’s banking sector and most revealing of how Singapore is shaping its future this new.

“OCBC is perhaps the most representative of the Singapore banking industry,” said Michael Makdad, senior equity analyst at Morningstar. “DBS is larger in mainland China, but less outside Singapore, while UOB has a larger presence outside Singapore but less in mainland China. OCBC has both.”

Chinese capital remains an important part of OCBC’s business. Southeast Asia is China’s largest trading partner, replacing the EU in 2020. Bilateral trade between China and Southeast Asian countries reaches $912 billion in 2023.

Singapore will be seen as the only safe place in Asia for US and European capital.”

DEVADAS KRISHNADAS, CEO, Future-Moves Group — Singapore

But Chinese investment in Southeast Asia is changing, said Tommy Xie, OCBC’s chief China economist. “Mining used to be the biggest recipient of investment from China about 10 years ago,” Xie said. “But now the market share has really decreased. Manufacturing is one of the largest industries today.” And most of that money is in Singapore, which Xie said accounts for just over half of all Chinese money flowing into the region.

Singapore has also become a safe haven for Chinese companies navigating an increasingly unfriendly world. The Southeast Asian country is a good starting point for Chinese companies trying to diversify their supply chains across the region in a “China plus one” strategy. And some startups, like Shein fast fashion platformhas quietly set up its headquarters in Singapore, at least partly out of hopes that a non-Chinese headquarters might be more acceptable to Western investors.

If Singapore wants to surpass Hong Kong as a financial center, its core strategy is asset management. The government offers tax incentives to single-family offices that set up shop in the city. As of August, there is now 1,650 such offices receive these tax credits, up from 400 at the end of 2020.

Asset management activities generated $2.9 billion for OCBC in the first 9 months of the year. The company has designated “Asian wealth” as one of its four business areas; just over a third of the bank’s income comes from asset management. Earlier this year, Vuong committed to invest an additional $192 million in the cities of Hong Kong and Macau, and its private bank announced a target to increase Hong Kong assets under management by 50% by the end of 2026.

That could be challenged by the new Trump administration. Both the first Trump administration and the Biden administration imposed sanctions and financial controls on China – first on individual companies, then on entire sectors. Expanded controls under the new Trump White House will force Singapore banks to stop working with certain customers and sectors.

OCBC sees the withdrawal of American banks from Hong Kong as an opportunity to win new customers. During a trip to the Chinese city earlier this yearWong noted that “more and more Hong Kong customers are choosing to talk to us, instead of talking to their Western counterparts.”

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OCBC was officially founded in 1932, when three local banks merged amid the Great Depression. This oldest predecessor bank dates back to 1912, giving OCBC more than a century of history in the Southeast Asian city.

The same bank, China Commercial Bank, opened a banking branch in Xiamen—then called Amoy—in China’s Fujian province in 1925. That branch survived the civil war. War and Communist takeover, giving OCBC nearly a century of uninterrupted operations in China, rare for a foreign bank.

For decades, OCBC was Singapore’s largest bank, but it has since been eclipsed by DBS Bank; today DBS holds approx Total assets are 587 billion USDvs 448 billion USD for OCBC.

With revenue of 18.4 billion USD in 2023, OCBC ranks 12th above Luckopening ceremony Southeast Asia 500 listRanking the region’s largest companies by revenue. (DBS, with revenue of $25.6 billion in 2023, is 10th, while UOB is 11th with $19.7 billion.)

OCBC also holds a majority stake in Great Eastern, the city’s largest life insurance provider, and provides private banking services through the Bank of Singapore, which it acquired from ING in 2009. In 2014, OCBC also acquired Wing Hang Bank, a Hong Kong bank, giving it a foothold in both the Chinese city and the Greater Bay Area, a Chinese project aimed at connecting the cities of the Delta Pearl River together.

62% of OCBC’s revenue is generated at its headquarters in Singapore. The majority of revenue outside of Singapore comes from two main sources. Southeast Asia markets, mainly Malaysia and Indonesia, contribute 19% of the bank’s revenue; Greater China, a composite term that includes mainland China, Hong Kong and the island of Taiwan, generated another 13%.

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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. She ranked 17th above Fortune’s most powerful women list for 2024: second senior executive from Asia, after Grace Wang, founder of Luxshare Precision Industry. Wong is also on Fortune’s Most Powerful People list, at number 71.

However, Wong’s roots lie in Hong Kong. Born there in 1961, she graduated from St. Paul’s College, one of the most prestigious schools in the city, followed by the University of Hong Kong.

Wong’s first banking job was at OCBC, as a management trainee in 1981; she quickly became the bank’s first China department manager. She eventually moved to HSBC, beginning a career that spanned decades and culminated in becoming the bank’s chief executive in China in 2015.

She returned to OCBC five years later, taking over as vice president and head of global wholesale banking in 2020. A year later, the board of directors approved her to become the next chief executive , especially pointing to her Chinese experience.

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Hong Kong remains Singapore’s closest competitor. The Chinese city has struggled in recent years as a result of the crisis tough Covid-free policyconcerns about Beijing’s encroaching jurisdiction, and one China’s economy is stagnant.

But Hong Kong officials now think they have turn a corner and is offering new incentives to attract the world’s wealthy, with the goal of attracting an additional 200 family offices by the end of 2025. UBS predicts Hong Kong could overtake Switzerland as a financial center world’s largest cross-border policy in early 2026.

Hong Kong’s IPO process, while still far from the highs of just a few years ago, is also showing signs of revival as Chinese companies such as Equipment manufacturer Midea launched a bumper list in the city.

By comparison, Singapore’s capital markets are “a complete joke”, said consultant Devadas. Singapore is “not even on the same playing field as Hong Kong”, even after Hong Kong’s stock market was hit hard by the pandemic. In the first three quarters of the year, Singapore attracted only one IPO; Hong Kong drew 45. The Singapore government has now set up an official task force to tackle the problem.

The Hong Kong stock market is recovering helped the city surpassing Singapore to become Asia’s leading financial center according to rankings by the China Development Institute, a consulting organization based in China.

However, the Singapore government is “not interested” in potential competition from Hong Kong, Devadas said. “They don’t see this as a zero-sum game.”

“What is good for Hong Kong is good for Singapore,” Devadas said, noting that things that support a healthy Hong Kong economy—like a healthy Chinese economy—also benefit Singapore .

“But the converse is not necessarily true,” he said. Singapore can penetrate other regions much easier than Hong Kong without being tied to China.

For its part, OCBC does not choose between the two. “Both are resilient international financial centers, attractive to international investors and businesses,” Wong wrote for Luck. Hong Kong is key to the bank’s plans in China; Singapore to expand ASEAN.

However, geopolitics could make life more difficult for Singapore, even if Washington does not directly pressure the Southeast Asian nation. Trump’s promise to impose broad tariffs on all imports into the US could upset the global trading system, affecting trade-centric economies like Singapore.

But Trump’s election also brings opportunity. Greater pressure on China will encourage more Chinese companies to invest in Southeast Asia – and provide even more opportunities for Singaporean banks, like OCBC, to benefit from capital flows there. “With more Chinese manufacturers coming [to the region]it has to benefit a bank like us,” Wong told analysts during OCBC’s earnings call on November 8, when the bank posted a record net profit for the year to date. now.

“Everyone comes to Singapore first to start a company,” she said.

This article appears in December 2024/January 2025: Asia problem of Luck with the subject line “Shifting fortunes.”