The city-state seems to be doing many things right while the former crown colony keeps boxing itself into dark corners.
In the past, the choice for those coming from abroad to live and work in Asia was a clear one.
Singapore was a place you intentionally steered towards when you had children in tow. Hong Kong was where you somehow slipped past airport customs only to find yourself having mutual existential qualms with a stranger at some bar with live music – at 4 in the morning.
But things seem to be changing. Singapore, as a financial hub, now seems like it is almost drowning itself in a constant torrent of positivity.
Pandemic-proof Airport
Just take a few headlines from just this past week starting with the finews.asia report that the city-state expects to lead the Asia Pacific as the market with the highest proportion of millionaires by 2030.
«Bloomberg» then wrote about the government’s announcement last Sunday that it is becoming somewhat more liberal by abolishing the law preventing sex between men. They also published a story that the Singapore Exchange expects more demand from outbound, soon-to-be-delisted US Chinese ADR issuers.
To top it all off, the Singapore airport announced that it is about to start work on a brand, spanking new, automated, and get this, pandemic-proof terminal.
Maybe No Quarantine
Let’s contrast that with Hong Kong. Here the government is considering potentially explosive quarantine exemptions for the world's leading international bankers to allow them to attend a planned summit in November. But from the outside, it comes across as a last-minute begging exercise even though the answer seems to have been a big no from the outset unless the city intended to scrap quarantine for all visitors by that date, which seems very unlikely if you have been here since the start of the pandemic.
Then, a survey recently showed that 35 percent of global asset managers have moved activities out of Hong Kong. Following that, the government reported earlier this month that the city’s population has declined significantly, a factor long seen throughout the region as a sort of final coup-de-grace portending imminent economic decline.
Rising Infections
Then we get to COVID. As of Thursday, the number of infections had jumped to over 8,500 from 7,800 on Wednesday after six days of more than 6,000 cases, as the «South China Morning Post» reports (paywall), and there is again talk of tightening social-distancing measures given expectations the number of daily cases is expected to go above 10,000 again.
Adherence to zero-covid or not, and regardless of whether the city has fared better or worse than Europe, the US, or the rest of Asia - one thing now seems to be getting increasingly clear.
Between the vaccinated and the unvaccinated and all this mask-wearing, all the contact tracing anyplace and everyplace, with the new color-coded zones, and all the testing - home tests if you want to go to a bar, testing at schools, PCR tests to visit things like nursing homes and similar. Nothing works anymore.
Losing the Mantle
So, does this mean that Hong Kong is about to lose the mantle of being one of Asia’s key international financial centers? It is not yet clear and we are likely to only find out in hindsight.
Although many articles on finews.com and finews.asia fret about the comparative rise and fall of various financial centers, happily drawing comparisons with each, a healthy, competitive hub is probably more correlated to the depth of its debt and equity markets than the number and heft of the banks they have, given the former is probably a better indicator and determinant of overall activity.
Here, Hong Kong, like Switzerland, still has relatively little to fear, according to statista (registration required). Hong Kong remains the world’s seventh-largest stock exchange based on the market capitalization of its listed companies as of June 2022 while Switzerland placed twelfth. Singapore? It does not yet make the top 20, lagging even behind Taiwan, which is not typically characterized as a major regional center of finance.
While Hong Kong is still the regional heavyweight ahead of the Lion City in terms of stock market capitalization, Singapore is, in many other respects, certainly punching above its weight right now.
