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

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

The past few years have been good for Singapore, and things are only set to get better. The island nation occupies a key position in the region, and maintains close relations with China and the United States even as the two powers decouple their economies amid escalating tensions.

Singapore’s recent growth as a financial center has often come at the expense of Hong Kong, a peer and longtime rival that has been drawn closer to Beijing in recent years. Trump’s return to the White House could tip the balance toward Singapore, as the next president threatens to tighten the screws on China.

Trump’s election “was a net positive for Singapore, and a net negative for Hong Kong,” says Devadas Krishnadas, a former Singaporean government official and CEO of Future Moves Group, a consulting firm. He expects US funds to move away from Hong Kong and its close ties to China, and instead continue their drive towards Singapore: “Singapore will be seen as the only safe place in Asia for US and European capital.”

Foreign capital from around the world flows into Singapore’s financial institutions, attracted by political stability, a lenient tax regime and relative neutrality. Assets under management in Singapore rose to $4.1 trillion in 2023before It managed $3.9 trillion In Hong Kong.

Singapore’s race with Hong Kong to become Asia’s pre-eminent financial center is led by its three major banks: DBS Bank, United Overseas Bank (UOB) and Overseas Chinese Banking Corporation (OCBC).

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Led by CEO Helen Wong, OCBC – the oldest of the Big Three – is perhaps the best description of the country’s banking sector and best reveals how Singapore is approaching this new future.

“OCBC Bank is probably the most representative of the banking sector in Singapore,” says Michael Mokdad, senior equity analyst at Morningstar. “DBS is larger in Greater China, but less outside Singapore, while UOB has a greater presence outside Singapore but less in Greater China. OCBC has both.

Chinese capital remains a key part of OCBC’s business. Southeast Asia is China’s largest trading partner, replacing the European Union in 2020. Bilateral trade between China and Southeast Asian countries will reach $912 billion in 2023.

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

Devadas Krishnadas, CEO, Future-Moves Group – Singapore

But China’s investments in Southeast Asia are changing, says Tommy Shih, chief China economist at OCBC. “Mining has been the largest sector receiving investment from China for about 10 years,” Xie says. But now the share has actually diminished. Manufacturing is one of the largest industries right now. Most of the money is in Singapore, which Shih says accounts for just over half of 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. Some startups, e.g Fast fashion platform Sheinhas quietly established a headquarters in Singapore, at least in part, out of hopes that a non-Chinese home base would be more palatable to Western investors.

If Singapore is to overtake Hong Kong as a financial centre, the core of its strategy is wealth 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 Get these tax breaks, up from 400 at the end of 2020.

Wealth management generated $2.9 billion for OCBC in the first nine 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 wealth management. Earlier this year, Wong pledged to invest And an additional $192 million in Hong Kong and Macau, and its private bank revealed a goal to grow assets under management in Hong Kong by 50% by the end of 2026.

It is possible that the new Trump administration will challenge this. 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 Singaporean banks to stop working with certain clients and sectors.

OCBC sees the withdrawal of US banks from Hong Kong as an opportunity to win new clients. During a trip to the Chinese city Earlier this year“More and more Hong Kong customers are choosing to talk to us, rather than to their Western counterparts,” Wong noted.

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OCBC’s official founding dates back to 1932, when three local banks merged amid the Great Depression. The oldest of these former banks dates back to 1912, giving OCBC Bank over a century of history in the Southeast Asian city.

The same bank, the Commercial Bank of China, opened a banking branch in Xiamen – then known as Amoy – in China’s Fujian province in 1925. This branch survived the civil war and Communist takeover, giving OCBC Bank nearly a century of continuous operations in China. Rare for a foreign bank.

For decades, OCBC was the largest bank in Singapore, but has since been eclipsed by DBS. Today DBS still exists $587 billion total assets,compared to $448 billion to OCBC.

With revenue of $18.4 billion in 2023, OCBC ranks No. 12 luckThe inaugural Southeast Asia 500 list, which ranks the region’s largest companies by revenue. (DBS Bank, with revenues of $25.6 billion in 2023, ranks 10th, while UOB is 11th with revenues of $19.7 billion.)

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

62% of OCBC’s revenue is generated at its home base in Singapore. A significant portion of its non-Singapore revenue comes from two main sources. Southeast Asian markets, especially Malaysia and Indonesia, contribute 19% of the bank’s revenues. Greater China, an umbrella term that includes mainland China, Hong Kong, and the island of Taiwan, generates an additional 13%.

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Helen Wong took over as CEO of OCBC Bank in 2021, the first female CEO in the bank’s history and the first woman to lead a Singaporean bank. She’s No. 17 on Fortune’s 2024 Most Powerful Women list: the second-highest-ranking female executive from Asia, after Luxshare Precision Industry founder Grace Wang. Wong is also on Fortune magazine’s inaugural list of Most Powerful People, at No. 71.

However, Wong’s roots lie in Hong Kong. She was born there in 1961, graduated from St. Paul’s College, one of the city’s most prestigious schools, and then from the University of Hong Kong.

Wong’s first banking job was with OCBC, as a management trainee, in 1981; She soon became the bank’s first China office manager. She eventually moved to HSBC, beginning a decades-long career that culminated in her becoming the bank’s CEO of Greater China in 2015.

She returned to OCBC five years later, joining as vice president and head of global wholesale banking in 2020. A year later, the board gave her the nod to become the next CEO, specifically citing Her experience in China.

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Hong Kong remains Singapore’s closest competitor. The Chinese city has struggled in recent years due to the fallout from its strict COVID-19 policy, concerns about Beijing’s judicial overreach, and a sluggish Chinese economy.

But Hong Kong officials now believe they have The corner has turned It is offering new incentives to attract the world’s wealthy, with the aim of attracting an additional 200 family offices by the end of 2025. UBS expects Hong Kong to overtake Switzerland as the world’s largest center for cross-border finance as early as 2026.

Hong Kong’s IPO pipeline, while far from the highs of just a few years ago, is also showing signs of recovery as Chinese companies such as appliance maker Midea launch ample listings in the city.

By comparison, Singapore’s capital markets are “a complete joke,” says Devadas, the consultant. Singapore is “not even in the same ballpark as Hong Kong”, even after the latter’s stock market took a hit in the wake of the pandemic. In the first three quarters of the year, Singapore had only one IPO; Hong Kong withdrew 45 votes. The Singapore government has now formed a formal task force to address the problem.

Hong Kong stock market rebound The city helped It overtakes Singapore as Asia’s leading financial center as ranked by the China Development Institute, a China-based think tank.

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

“What’s good for Hong Kong is good for Singapore,” says Devadas, noting that things that support a healthy Hong Kong economy – such as a healthy Chinese economy – also benefit Singapore.

“But the opposite is not necessarily true,” he says. Singapore can benefit from other regions much more easily than Hong Kong, without bearing the burden of being linked to China.

OCBC, for its part, is not choosing between the two. “They are both resilient international financial centers and attractive to international investors and companies,” Wong writes. luck. Hong Kong is considered a key element in the bank’s plans for China. Singapore to ASEAN expansion.

However, geopolitics could make life more difficult for Singapore, even if Washington does not directly pressure the Southeast Asian country. Trump’s promise to impose sweeping tariffs on all imports entering the United States could upend the global trading system, harming trade-focused economies like Singapore’s.

But Trump’s election also brings with it opportunities. Greater pressure on China would encourage more Chinese companies to invest in Southeast Asia, and also provide more opportunities for Singaporean banks, such as OCBC, to benefit from those flows. “With more Chinese manufacturing coming (to the region), that should benefit a bank like us,” Wong told analysts during an OCBC earnings call on Nov. 8, when the bank revealed record net profits for the year so far.

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

This article appears in the December 2024/January 2025: Asia edition of luck Under the title “Wealth Transfer”.