Analysts are witnessing a record inflow of funds from abroad being funneled into Singapore bank accounts midst growing uncertainty into Hong Kong’s status as an Asian financial center.
Singapore, a fierce competitor of Hong Kong, for being Asia’s premier wealth center, typically attracts capital inflows during regional turmoil due to its political stability and AAA credit rating.
In April 2020, deposits from non-residents into Singapore’s banks jumped by 44% to a record $44.37 billion (S$62.14 billion), in comparison to a year ago, marking the fourth straight monthly rise.
In the last 1 year, deposits have risen in all but one month.
The data does not provide a break up of the origin of the inflows. Analysts however are correlating the turbulence facing Hong Kong with the surge in deposits.
“Hong Kong has been a source of funds for obvious reasons,” said Song Seng Wun, an economist at CIMB Private Banking while adding, the pandemic and pressure on regional currencies had also fed fears of a currency crisis and capital flight.
In a statement, the Monetary Authority of Singapore said, since mid-2019, there has been a broad-based increase of inflows into Singapore by non-residents from multiple jurisdictions, including Hong Kong.
“These flows have become more volatile in recent months due to the COVID-19 pandemic and resulting market fluctuations,” said the central bank.
Incidentally, the data also shows a four fold increase in foreign-currency deposits at Singaporean banks which touched a record S$27 billion in April, in comparison to a year ago. They were up by around 200% in the first four months of 2020 from the same period last year.
Non-resident deposits include funds from individuals and companies with registered addresses outside the city-state. Analysts opine, the data only provides a partial picture of inflows, and is seen as a good gauge for market sentiments.
Inflows into Singapore is likely to continue as long as there are regional uncertainties, including those in Hong Kong, said Andrea Choong, an analyst at CGS-CIMB Securities.
($1 = 1.4006 Singapore dollars)