Bad news in Hong Kong is good news for Singapore

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
#1
http://www.cnbc.com/id/101963981

Bad news in Hong Kong is good news for Singapore
Evelyn Cheng | @chengevelyn
3 Hours Ago
CNBC.com

Hong Kong is a global financial center and the business gateway to China, but as pressure to conform with Beijing's wishes grows in Hong Kong, multinational firms are seeing more stability in Singapore and expanding their outlook to the broader Pan-Asian market.

Some firms are now finding Hong Kong, left, less appealing for their Asia headquarters than Singapore, right.
George Rose | Getty Images, Reuters
Some firms are now finding Hong Kong, left, less appealing for their Asia headquarters than Singapore, right.
"Looking ahead, I think that Singapore has a distinct advantage," John West, head of research firm the Asian Century Institute, told CNBC. "Hong Kong is becoming increasingly a part of China, with the Chinese government interfering more and more, which will compromise the quality of governance. There is growing popular discontent."

China's decision on Sunday to limit free elections on the island has spurred greater unrest in Hong Kong as locals resist growing central power over the former British colony's democratic systems. Although the changes will not shake Hong Kong's status as a financial center, unease over the political situation has been at the back of people's minds since Beijing took control in 1997, said Chris Archibold, international director in Singapore for commercial real estate firm Jones Lang LaSalle.
Read MoreWill politics stir up an economic storm for Hong Kong?
Companies are saying, "I don't know about Hong Kong, but I'm certain about Singapore," Archibold said. "I don't think Hong Kong has changed as a destination, but Singapore has caught up a lot."
Consistently ranked as top places in the world to do business and offering an English-speaking environment with highly developed infrastructure, Hong Kong and Singapore have served as Western business bases in Asia for many years. Multinational companies such as Unilever, DHL, Merck and IBM have had regional operations in Singapore for decades. On the other hand, financial firms such as JPMorgan Chase have their Asia Pacific headquarters in Hong Kong.
Big firms move their HQ to Singapore

Recently, however, several big companies have moved their regional headquarters to Singapore from China, signifying a shift in market strategy.


In recent years "we've seen a trend of large companies moving their Asia Pacific headquarters from China to Singapore," said Damian Chan, international director for Americas from Singapore's Economic Development Board (EDB), who added that companies are not abandoning China but increasingly looking at Asia beyond its largest economy. "I think when companies look at Asia, they need a China-plus-one, a China-plus-two strategy."
Ten years after moving its Asia Pacific headquarters from Singapore to Shanghai, General Motors relocated the office back to Singapore on Aug. 5 of this year.

Tensions between Beijing and Hong Kong played "absolutely no role" in the move, but GM said the decision was part of an effort to expand out of the Chinese market by finding a location with good access to other Southeast Asian nations and offering strong local talent. GM will keep its office in Shanghai to oversee operations in China.

Read MoreBalmy Singapore contends with rising protests

"I think Singapore gives us the ability to look out into the region," Matt Hobbs, vice president of government relations and public policy at GM International, told CNBC.

"We take a much longer view than any political cycle," he said. "Singapore had more of the other things than short-term political considerations."

Other companies are making the same move. Food-processing firm ADM announced in June the move of its Asia Pacific headquarters to Singapore from Shanghai, while retaining the office in China. An August article from Jones Lang LaSalle noted that L'Oreal moved many of its Asian operations to Singapore from Shanghai, and added that insurance firm Aon is building its Asia Pacific hub in the city-state.

Analysts said that Singapore's quality of life, including a relatively pollution-free environment and attractive education options, are appealing for senior management who are often relocated with their families to Asia.

In addition to those aspects, EDB's Chan cited Singapore's intellectual property protections, which he said compete with Japan for the highest ranked in the world.

Read MoreThere's more to Modi-Abe ties than China

China has run into U.S. accusations that it doesn't do enough to protect intellectual property, and Western technology firms have accused China of stealing intellectual secrets through their China-based subsidiaries.

Chan also noted that a Towers Watson Asia headquarters study found the city-state hosts 40.8 percent of Asia Pacific headquarters among 319 global Fortune 500 companies. In contrast, Hong Kong hosts 34 percent, and the remainder of China 15.8 percent.

In terms of wealth, in 2012 Singapore had a per capita GDP of $54,000 compared with Hong Kong's $37,000, according to the latest World Bank report.

Hong Kong's strength: Mainland access

As Hong Kong strengthens its connection to the economic powerhouse of mainland China, the island is likely to benefit in some way from the relationship, said Damien Duhamel, whose advisory firm has analyzed Asia's most innovative cities.

"I don't see Hong Kong becoming more Chinese as an (obstacle) to its future growth," he said. Singapore "has yet to have success in China. It does not play its China access card because it does not have a China access card."

Even with a stock exchange in Shanghai, mainland Chinese firms have preferred to list on Hong Kong's stock exchange and open offices there, Venant Chiang, analyst at Jefferies Hong Kong, said. A trial program between Shanghai's and Hong Kong's exchanges is also planned to launch in October.

"We don't know what extent (of) new demand we will realize here," he said. "But I believe with more liquidity from the mainland here, that will help our capital market."

Read MoreChina real estate: A bubble bursting?
On a cultural level, urban studies theorists such as Richard Florida see Singapore and Hong Kong as equally strong in their ability to attract talent—the factor he believes is key to the future. And financially, he believes Hong Kong has the edge.

"My gut feeling is that Hong Kong has the advantage," he said. "Global financial centers are extremely hard to displace. Hong Kong is a very well-established financial center."

For global firms, shifting focus to the pan-Asia scene may solidify China's rise as an independent market—the same way people think of established regions of North America and Europe. The unfolding tale of Singapore and Hong Kong could be an indicator of a new market order.

"People do lump the two cities together and think of them as the same thing, but maybe looking forward they'll be more and more different," West said.

—By CNBC's Evelyn Cheng
Reply
#2
I am mulling on the same topic, but not on the macro level as the article, but on SEHK role in the China financial liberalization.

The role will be downplayed by having Shanghai FTZ, but it will take time for the FTZ to settle down. At the mean time, the liberalization needs a control platform for foreign fund participation. The recent link initiative between SEHK, and Shanghai Exchange, is one of the visible execution for the purpose.

If SEHK role is unfulfilled due to whatever reason(s), where is the next best option? IMO, Singapore (SGX) seems the best next option, with the similar offshore hub status. Other offshore hubs are too far away, and having different time-zones.

What your view?
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
#3
Maybe short term but long term it's hard for SG to displace HK.

Hong Kong doesn't have a defence budget don't need to spend on maintaining an army for it's security, the british took care of them for free now the mainlanders do it but who takes care of our security? For us there's always a cost of 4% of our gdp to cover, that's why no matter how they will always be able provide "cheaper" compare to Singapore.

And now with rmb slowly liberalizing hk will be a gateway to that in times to come.

The person as always to watch for is Li Ka Shing recall how he bought big during the 1960's clashes and riots when there was blood in the streets. Compare to the current situation it's not as bad yet, but after selling assets recently Li now sitting on a mountain of cash.
Reply
#4
Hong Kong still works, and works well, but it is starting to become locked in a time-warp. The lack of a real political system means that there is vocal, grass root opposition to every change or step forward. That means that the big decisions are not being made, or made slowly. Travelling between the two cities, the contrast between the development of Marina Bay and the lack of progress on West Kowloon or Kai Tak is very evident. The question mark in my mind is how quickly this stasis will adversely affect Hong Kong in an ever changing world.

My financial industry contacts in Hong kong have told me that the better quality China companies listed in Hong Kong, and that the dross went to Singapore - hence the long list of China companies in Singapore that have been delisted or are suspended or where the share price is a small fraction of the listing price. However, some of those China company issues now appear to be affecting Hong Kong as well. This morning's South China Morning Post has a list of 'Troubled Listings': Tianhe Chemicals, China Resources Power, ABC Communications, Fujian Nuoqi and Hydoo International.
Reply
#5
Why non of the state bank from PRC list on SGX ?
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
Reply
#6
SGX should focus on Asean countries to get them to list here instead. Asean economies will eventually be as large as China's.
Reply
#7
It is a commit-suicide for HK, it the independence call materialized...

Hong Kong leader hits back at independence calls

HONG KONG — Hong Kong’s leader hit back on Tuesday (March 5) at growing calls for independence from China, particularly among young activists, as he dismissed the need for any discussion on a breakaway.

Unpopular leader Leung Chun-ying’s remarks come as concerns grow over increasing interference from Beijing in the semi-autonomous city’s affairs, with fears its cherished freedoms are ebbing away.
...
http://www.todayonline.com/world/asia/ho...ence-calls
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
#8
Ask the young Hkers if they want to serve NS for defend their independent state....these guys can TCSS only.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
#9
The problem lies with their Dual Nationality. Those who are rich or can afford it, already have them ready. They are the natural upper class in the society and will avoid military service. Same applies to taiwan, those who can afford it, will escape military service by having dual citizenship.

In the end is the poor or less resourceful or personal constraints who must do the military thing. They are probably the ones who are being manipulated to fight in the street protest. But face the fact, do you really expect them to be in the military to face PRC armies or others ?!

That's my personal view.

Just my Diary
corylogics.blogspot.com/


Reply
#10
(06-04-2016, 11:59 AM)opmi Wrote: Ask the young Hkers if they want to serve NS for defend their independent state....these guys can TCSS only.

I think these folks have not fully appreciated the implications.

The reality is that China is their biggest customer. How many jobs will go up in smoke without China's blessings? There is just too many ways Hong Kong can be squeezed by Big Brother.

Ditto for Taiwan.... Sad
Reply


Forum Jump:


Users browsing this thread: 2 Guest(s)