Hong Kong has regained its standing as the financial centre of Asia from Singapore, which held this position two years ago
Hong Kong now ranks third globally, ahead of Singapore.
A surge in stock market activity and major listings bolstered its comeback.
Net fund inflows increased by 3.4 times, led by family office growth.
The comeback of Hong Kong is impressive, having trailed for two years. A great example of its turnaround was the Midea Group IPO, which made it generate HKD $31 billion($4 billion), and is the biggest one since JD Logistics in 2021.
The city's financial sector also enjoyed huge family office developments, with net fund inflows ballooning to HKD 390 billion ($50 billion). This expansion reflections a rebound in Hong Kong's role as an essential player in the region's financial system after suffering political unrest and the pandemic.
Why is Hong Kong back on top?
Heavy capital markets and strategic location as a gateway to China's financial hub make Hong Kong a strong financial centre. The Midea Group IPO perfectly reflects investor confidence in the market infrastructure and depth of Hong Kong. Along with this listing and several other new financial reforms, Hong Kong is attracting global capital.
Other than IPO activity, family offices have become instrumental in its rebound. Family offices are private wealth management firms for high-net-worth individuals. The asset base has been increasing with more and more high-net-worth individuals chosing Hong Kong as a base for managing assets, driving a huge surge in net fund inflows. This puts Hong Kong in an excellent position to stake its claim as a regional hub for wealth management.
Singapore’s competitive edge
The strength of Singapore, however, cannot be easily overlooked while Hong Kong is on its resurgence. The city-state has maintained a stronghold as an unshakeable leader, mainly in times of unrest in Hong Kong, especially since it boasts a reputation of political stability, rigorous regulation, and an exponentially growing fintech ecosystem. Singapore has played to its innovation strength by going full steam with green finance, digital banking, and decentralised finance in a bid to attract companies looking for solutions geared towards the future.
Although Singapore lost its status as Asia's top financial centre, the country's ability to be able to continue on high ranks globally demonstrates good resilience. Its investment will still be concentrated in emerging sectors, and still maintained an easy-to-navigate regulatory framework, offering potential advantages to firms in consideration of relocating or expanding to Asia.
The battle for Asia’s financial crown
The competition between Hong Kong and Singapore is essentially a highly competitive rivalry for each to gain control of the Asian financial market. History has favoured Hong Kong, which thrived as the financial gateway to China. That position continues to be leveraged as the economic influence of China has grown in strength. Stock markets and financial listings thrive there, such as Midea Group's recent IPO, further establish its superiority.
On the other hand, Singapore, through innovation and diversification, has managed to be successful in developing new-age financial solutions, such as fintech, blockchain, and sustainability-linked finance. This shift toward future technologies gives Singapore an edge that would perhaps help the country perform better in long-run growth since the world is slowly shifting towards digital finance.
Hong Kong is bouncing back fast — which sets the city up perfectly to regain its standing as Asia's financial capital. Yet Singapore's focus on innovation and its regulatory superiority means this financial tale of two cities still has plenty of time to run.