Singapore vs HK: A high-flying rivalry
Hong Kong may still be the dominant regional banking centre but Singapore is an ever more favoured location.
When Thomas McMahon and his Indian backers were deciding where to locate an Asian commodities exchange, they turned initially to Hong Kong – attracted by its proximity to China and the mainland’s booming, commodity-hungry economy.
Three years later, the exchange, a subsidiary of India’s Financial Technologies group is about to open – not in Hong Kong but nearly four hours flying time to the south in Singapore. “we looked at Hong Kong with a view to being able to serve the China market, but we decided that we couldn’t run a viable independent commodities exchange from there – the business environment just wasn’t right,” said Mr. McMahon, a former director of Nymex Asia. “Inversely, Singapore was very welcoming. The authorities were completely happy with the concept of an independent foreign-owned exchange competing with the existing exchange and the view seemed to be there should be a totally competitive environment, which is just what we wanted.” The city state’s enthusiasm for what will be called the Singapore Mercantile Exchange, and its willingness to countenance potential collateral damage to the locally-listed incumbent, the Singapore Exchange, nearly illustrates the business-friendly approach that is helping the island to emerge as a strong competitor to Hong Kong in the battle to be Asia’s 21st- century international business capital. Others put it more graphically. “You walk into Changi Airport and they practically give you a hedge fund start-up kit.” Mr. James de Castro, one of the founders of Hong Kong- based Asia Alternative Asset Management, told a recent conference on the island’s financial centre. The prize is huge.
Rapid economic growth around Asia is creating all sorts of opportunities, dragging in large numbers of bankers, traders, lawyers and other professionals,. More big companies in Europe, North America and India are deciding they need a regional headquarters – and the demand for English and reliable communications means the choice is usually between Hong Kong and Singapore. Japan remains the world’s second-largest economy and Tokyo the second-biggest stock market. But it is not really in the game as it is almost entirely domestically focused. For example, as a consequence of regulatory and language barriers, the Tokyo Stock Exchange has attracted fewer than 10 overseas listings since 2004, compared with hundreds bagged by Hong Kong and Singapore Journey to the East
Nor is anyone writing off Hong Kong, an indispensable entrepot for China and the regional home for the most global investment and commercial banks, private equity funds, large investment institutions and international legal and accountancy firms.
The self-governing Chinese territory is a big player in the capital markets, hosting a succession of blockbuster initial public offerings of Chinese companies and preparing this summer to co-host(with Shanghai) the IPO of Agricultural bank of China, which at up to US$29B (S$40B) is expected to be the world’s biggest listing.
Underlining its importance, Mr Michael Geoghegan, HSBC chief executive, recently relocated from London to Hong Kong and JPMorgan moved the head of its international private banking unit there from New York to focus on regional opportunities.
Mr. Anthony Bolton, star stock picker at UK-based Fidelity International, has scrapped his retirement and decamped to Hong Kong to launch a China equities fund.
The latest ranking of global financial centers, published last month by the City of London Corporation, shows Hong Kong has narrowed the gap with London and New York to tits smallest since the study was introduced five years ago, with fast-improving Singapore just behind in fourth place. The advance of both cities is clearly worrying Western competitors. “ We cannot afford to be complacent in the face of growing competition...
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