Singapore could rival Hong Kong as an asset management hub

Written by Kapronasia || May 03 2023

Singapore has long competed with Hong Kong in asset management. While the latter’s industry is still larger, the city-state’s has been growing expeditiously, buoyed by an influx of capital from China as well as the broader global super rich. Singapore's assets under management grew 16% to S$5.4 trillion (US$404.6 billion) in 2021. More than 75% of that originated outside Singapore, with about 30% coming from other Asia-Pacific countries.

Alternative asset growth in Singapore has been strong of late. “Within the alternatives sector, growth of private equity and venture capital assets under management was robust at 42% and 48% respectively," the Monetary Authority of Singapore (MAS) said in its 2022 annual report (published in October) on the sector. Private equity and venture capital managers reported dry powder (committed but undrawn capital) of S$90 billion and S$5 billion, respectively.

At the same time, the number of licensed and registered fund management firms in Singapore increased 15% to 1,108 as of December 2021.

Further, the family office segment in Singapore has been growing especially briskly. More than 700 family offices were based in Singapore at the end of 2021, according to Singaporean government data cited by Bloomberg. Lawyers and industry groups estimate that the number of family offices in the city-state had more than doubled to 1,500 by the end of 2022. IQ-EQ, an investor services firm, estimates about 40% of that total are mainland Chinese. Among the super-rich to open family offices in Singapore include Mukesh Ambani, Asia’s richest man, Google co-founder Sergey Brin, hedge fund billionaire Ray Dalio and vacuum cleaning entrepreneur James Dyson.
Yet the family office boom in Singapore is also a sensitive issue in some respects. As with any large, sustained capital outflows from China, the surge in Chinese money arriving in Singapore has not gone unnoticed in Beijing. While the city-state recognizes the importance of these inflows for the local wealth management sector, it also must be mindful of the optics.

At a meeting in February, without specifically referring to China, the Monetary Authority of Singapore (MAS) told banks that when they reported the sources of their inflows, they should not single out any particular markets, according to financial industry sources cited by Financial Times.

The surge in capital inflows from China could also be sensitive given the rising cost of living and housing in the city-state.