The Monetary Authority of Singapore attempted to quash media reports suggesting that the city-state was a significant beneficiary of outflows from the politically unstable Hong Kong.
«[M]edia reports suggesting that there were large flows of deposits from Hong Kong to Singapore were incorrect,» Singapore’s regulatory said in a statement. «While foreign currency deposits in Singapore have grown substantially since the beginning of this year, the order of magnitude is much less than cited in some media reports.»
According to the MAS, total foreign currency non-bank deposits grew 20 percent year-on-year to reach S$781 billion ($561 billion) at the end of April this year. This in contrast with media reports last week that claimed foreign currency deposits had surged four-fold due to their focus in just domestic banking units (DBU) while not accounting for Asian currency units (ACU).
«It is not meaningful to look at only the foreign currency deposits in the DBUs as they make up less than 5% of the total of such deposits across both the DBUs and ACUs,» MAS added.
No Single Region or Country Source Dominates
The MAS noted that the strong foreign currency deposit growth is due to several factors due to the ongoing coronavirus pandemic: increased liquidity from central bank policy, risk-averse corporates and treasurers alongside higher levels of precautionary savings from households.
«The strong growth in foreign currency deposits in Singapore this year has come from a variety of sources – domestic, regional, and beyond the region,» the MAS said, noting that other financial centers have also experienced strong growth. «No single region or country source dominates.»
Hong Kong
Media reports have underlined phenomenal growth in Singapore’s non-respondent deposits which posted more than $44 billion in April, a 44 percent year-on-year surge, according to central bank data. This is the fourth straight monthly rise and the 11th monthly increase out of the past 12.
Hong Kong has been cited as a major source due not only to ongoing unrest but increasing fears about national security legislation the effects of which have already begun to be felt by the industry before implementation.
«Chinese [high net worth individuals] like the law from the perspective of their love for the Chinese flag, but not from their asset protection perspective,» said a «Reuters» report separately in late May, citing an unnamed banker.
