Financial services giant JP Morgan has observed that flow of foreign exchange into the banks of Singapore has increased significantly in past few months. Its analysts say that this could be due to growing unrest in Hong Kong that has driven companies and investors to move their funds to a safer location. Other bankers and wealth managers operating in the region have affirmed that the unrest in Hong Kong has benefited Singapore as they have received enquiries from clients to transfer funds to Singapore. Goldman Sachs affirmed in its latest estimate that in October alone Hong Kong lost around $4 billion in international deposits to Singapore as both are close competitors as financial hubs in Asia. Despite these issues the protests in Hong Kong show no signs of abating and the peaceful protests have erupted into clashes with police and destruction of private and public property.
J.P. Morgan’s co-head for Asia Harsh Modi stated that though he cannot affirm if there has been growth in flow of funds from other parts of China to Singapore but foreign deposits in Singapore banks has been rising steadily. In recent weeks the Hong Kong demonstrations have become violent and have affected business operations of a wide range of service providers like airline firms, property companies and other retailers. As per preliminary data released on Thursday it has been affirmed that Hong Kong has officially slipped into recession and this is for the first time in 10 years during third quarter. A key risk for lenders in Singapore would be their exposure to Hong Kong said Modi, referring to credit risk associated with bad loans in the nation’s business entities. He stated that of the three biggest banks in Singapore United Overseas Bank has the least exposure while both OCBC and DBS Bank have a large retail presence in Hong Kong.