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Viewpoints and latest developments

Hong Kong turmoil triggers Singapore fund licence surge


The Monetary Authority of Singapore received about 200 applications from fund managers seeking authorisation last year ©


Siobhan Riding in London YESTERDAY


Applications for fund management licences in Singapore are up more than a tenth in the past year as asset managers look to fireproof their Asia operations in the wake of Hong Kong’s anti-government protests.

Global investment houses have traditionally established significant bases in Hong Kong, using it as a launch pad to expand across the region.

But months of violent demonstrations in the Chinese territory, as well as fresh fears linked to the spread of the deadly coronavirus emanating from China, are spurring asset managers to strengthen their operations in the nearby financial hub of Singapore.

Hugh Young, head of Asia at Standard Life Aberdeen, whose Asian operations are concentrated in Singapore, said that the Hong Kong turmoil had led to more interest in Singapore among senior fund executives.

“There is more reason for senior people not to want to be in Hong Kong today than there was one year ago,” he said. “But at this stage it will be more like one or two senior staff members moving to Singapore rather than the whole Hong Kong office.”

The Monetary Authority of Singapore (MAS) received about 200 applications from fund managers seeking authorisation last year — up from 180 the year before, according to people familiar with the situation.

Three Hong Kong-based hedge funds — Myriad Asset Management, Nine Masts and Pinpoint — confirmed to FTfm they had newly established entities in Singapore. All three pointed to business opportunities rather than the Hong Kong unrest as their motivation.

However, interest in Singapore underlines how the Hong Kong protests threaten to chip away at its competitive position and status as Asia’s principal fund hub.

Maria Gabriela Bianchini, a Singapore-based consultant who advises hedge funds on regulation, said a growing number of fund groups were looking at opening satellite offices in Singapore to give them flexibility should the protests become worse.

“Asset managers are very nervous, as are their investors,” said Ms Bianchini. “The continuation of the protests and the fact that there have been several incidents where uninvolved staff have ended up caught between the police and protesters, has led some groups to push forward with plans to open a second office in Singapore, which can be further expanded in the event of increased tensions.”

Panic over the coronavirus in recent weeks is prompting some groups to accelerate their plans to move staff to Singapore, said Ms Bianchini, noting that while Singapore had a similar number of confirmed cases, there was greater faith in the country’s response to the outbreak.

She cautioned that the expense of setting up a fund management entity in Singapore — the MAS requires groups to have two full-time front office staff on the ground and commit significant regulatory capital — meant that for now only the most well- resourced fund groups were taking the plunge.

Will Tan, a recruiter a Principle Partners, said: “The candidates who used to be interested in Hong Kong roles won’t move there any more, but they will consider Singapore.”

Hong Kong is of strategic importance to global asset managers as a gateway to China — a key focus for groups as the world’s fastest-growing fund market prepares to open up to international investment houses.

While many groups previously serviced mainland China from Hong Kong, an increasing number view the liberalisation of the Chinese market as a reason to shift more staff to Shanghai, with the Hong Kong protests serving as an additional factor.

Ms Bianchini said Hong Kong would continue to be Asia’s pre-eminent financial centre but “on a two-year view, will be negatively affected and business is likely to go to Singapore or to Shanghai”.

The MAS declined to comment on new applications. But it said the number of fund managers authorised in Singapore stood at 892, compared with 780 at the end of 2018.

Copyright The Financial Times Limited 2020. All rights reserved.

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