A long-awaited return to Southeast Asia
Over the last few weeks, I’ve had the pleasure of returning to Asia, catching up with clients and contacts in this wonderful part of the world. I first stopped in Singapore for a few days, before heading off a mini holiday with my family in Vietnam. Afterwards, we were able to return to Hong Kong for a week before finally returning to London. It was great to be back.
Several observations have surfaced in my mind since my return. One is that infant jet lag isn’t as bad as my wife and I first feared! But secondly, the two cities have gone through quite a transformation over the past 3 years, reshaped due to the pandemic obviously, but also continued shape shifting of geopolitics and the evolution of the capital markets in the region.
Great to be back
There was an insightful article in the FT recently that weighed the “Singapore vs Hong Kong question”: which city is winning the battle to be the Asian finance and tech hub of the future?. Having travelled to both for the first time since 2019, I was able to draw an opinion.
It was great to be back talking finance and tech in this part of the world and I was pleasantly surprised to find that some things never change. Although, also, that some do.
For example, there’s always been (and I think will be for the foreseeable future) more people to meet in HK from a DCM perspective. However, it was interesting to note that, overall, it felt like there was more for me to do and more people to meet in Singapore in 2023 than in 2019.
Talent drain
Singapore felt busier than I can remember. There was a buzz, a sense of action. This is most likely due to the fact that, as reported in the FT, there has been a significant shift in talent from HK to Singapore. As the FT states:
“It is difficult to quantify how many people have moved from Hong Kong to Singapore and banks — hesitant to annoy Beijing — remain reluctant to say how many staff they moved there during the height of the pandemic.”
My network backs up this point. A college friend of mine, who’s the founder of B2C fintech, moved his family from HK to Singapore last year. Another friend, who’s been in Singapore for a few years, told me how rents have shot up by 70% in the last 2 years due to the large influx of people. The talent deluge is real – and the impact on the ground is palpable.
Singapore on song
Interestingly, tech in DCM feels as if it is much higher on the agenda in Singapore than in HK.
In most conversations I had in Singapore, people were aware of the developments in Europe in this space and were fully up to speed on what we are doing at Origin and the work of our peers. The financial infrastructure in Singapore, including the Monetary Authority of Singapore and SGX, seems to be doing a good job of fostering and empowering the tech and fintech scene.
It’s interesting to also note how Singapore has become a crypto hub and has been the site of the first institutional application of DeFi. It’s felt truly progressive and energised. I was hugely impressed and excited by its prospects.
A unique facilitator
Of course, despite the noise and action emanating from the younger upstart, HK remains the pre-eminent gateway for the international market to interface with China, whose bond market now totals the same as the US.
One trend we heard a lot about in HK has been the emergence of large “southbound” flows (Chinese mainland investors investing in offshore or international securities) through China Bond Connect, which was established by the HKEX to help facilitate trade into and out of mainland China. Traditionally, mainland investors would have been able to achieve higher yields in domestic securities, so wouldn’t be that interested in deploying capital offshore. However, given recent interest rate volatility, the yields on offer for international securities have been attractive, and many dealers in HK have taken advantage of this flow.
Hence, whilst Singapore develops as a hub for Southeast Asia, (especially in the wealth management and family office segments), HK retains a huge advantage in its ability to bridge China with the international markets. Its location makes it a unique facilitator, and this seems to protect its status as a hub with huge power. It’ll be interesting to see how long that status lasts.
Back in business
Away from capital markets and fintech, I was lucky to travel to HK just a few weeks after it lifted its 1000-day-long mask mandate. As a consequence, my visit to both HK and Singapore felt… normal, as if it were pre-2020.
I met with clients in their offices, at restaurants, and in bars without restrictions. It was certainly interesting to hear the stories of what many HK residents have had to endure over the last 3 years, having been unable to leave, and hear tales about the unlucky few who got caught in quarantine. All expressed huge relief that it was finally all at an end.
Even before COVID, I always enjoyed visiting both great cities, but given what this part of the world has been subjected to in recent years, this trip had an extra element of pleasure and excitement. I can’t understate how happy I was to be back meeting clients and friends – it was great to be back and I’m pleased to report that, whatever your outlook, whichever city may be currently ahead or behind, the future for the region looks reassuringly bright.
