Singapore is a rising star as a one of the world’s leading wealth management hubs, according to figures from the city state’s financial regulator.
Assets under management have hit a record high at US$1.29 trillion (£840 trillion).
That’s an increase of more than a fifth (22%) in just a year – and much is attributed to wealthy clients shifting their cash out of Switzerland to a new home as concerted pressure has ended the veil of banking secrecy in the Alpine state.
The vast majority of the money – 80% – comes from offshore, said Ravi Menon, managing director of the Monetary Authority of Singapore.
He also explained that 70% of the incoming cash is invested around the Asia Pacific rim.
Singapore’s advantages
“This shows how we act for international and regional clients,” said Menon.
A succession of recent reports has predicted that Singapore will surpass Switzerland as the main management centre for the world’s richest individuals and businesses.
The latest, from global accountants PwC, predicts this will happen in lesson than two years.
The thinking is that investment acumen is broadly spread around the world and the only advantage Switzerland offered the wealthy was banking secrecy.
Another advantage for Singapore is an agreement with China to deal with Renminbi transactions.
The deal lets Singapore act as a Renminbi clearing house, offer financial products in the currency and issue bonds.
Economic worries
Other key features of Menon’s speech included:
- Singapore expects higher economic growth and lower inflation in the next 12 months, compared with 2012
- The government fears average household debt is rising – especially with the amount of cash flooding into property as homes and investments. Mortgages are equivalent to 46% of GDP, compared with 35% in 2010.
- A strong Singapore dollar is pulling ahead of the US dollar in the same way as the Swiss Franc strengthened, buoyed by strong financial sector performance
“My only worry is that low interest rates, growing debt and increasing property values could impact on the nation’s financial stability,” said Menon. “Although Singapore’s banks are strong, will good balance sheets that are subject to regular stress tests, we still have to be wary.”
He also expressed concerns about credit checking for granting loans – giving an example of a couple with a joint annual income of S$6,000 receiving a S$400,000 mortgage despite their outgoings adding up to to 90% of their monthly income.
Click here for a full transcript of Menon’s speech
