Among the report’s central findings was that total assets (AUM) managed by Singapore-based asset managers reached an all-time high at the end of 2012 of S$1.63trn ($1.29trn, £839bn), up 22% over the same period a year earlier. Of this amount, around 80% of the assets sourced “from outside Singapore”, the managing director of the Monetary Authority of Singapore, Ravi Menon, told an audience of journalists this morning.
This, coupled with the fact that more than 70% of total assets were invested in the Asia-Pacific region, reflected Singapore’s role “as an asset management hub, serving both regional and international investors”, Menon added.
Menon’s comments, which accompanied the release of the MAS annual report, came as a growing number of experts have been predicting the imminent replacement of Switzerland by Singapore as the world’s top wealth management centre, in terms both of assets under management and perception.
The latest was PwC, which earlier this month predicted Singapore could overtake Switzerland within two years in terms of AUM. In April, as reported, the Global financial analysis group Timetric predicted Singapore would overtake Switzerland as the world’s largest offshore private banking market by 2020.
Menon said Singapore is also now “the leading reinsurance and speciality insurance hub in Asia”, home to, among other entities, Lloyd’s Asia, the only major market outside of Lloyds of London that writes specialist and reinsurance business in the region.
Increasingly it is also a player in the growing business of handling renminbi transactions, Menon noted, with clearing facilities, RMB bond issuance and the recent extension by China of RMB Qualified Foreign Institutional Investor privileges to Singapore, thus enabling its financial institutions to include RMB product offerings in their ranges.
Flip side of strength…
There are disadvantages in being the jurisdiction of the moment, and one of them – as Switzerland knows only too well – is that it can result in a currency becoming undesireably strong. This was the case in Singaporelast year, Menon noted, in that it contributed to the MAS, in its role as Singapore’s central bank, recorded an overall loss of S$10.6bn.
Menon noted that this loss resulted even though the authority realised investment gains of S$8.9bn, in the financial year ending in March 2013.
“In short, we made good investment returns, but when measured in Singapore dollars, these gains [were] more than offset by strength of the currency,” Menon said.
Other points included in the MAS end-of-year report:
- The overall macroeconomic outlook for Singapore is "better than last year", with GDP growth likely to be stronger and consumer price inflation lower in 2013 than in 2012
- Key economies elsewhere in the world are also "in better shape this year"
- Singapore’s banking system "remains sound" but there are "oncerns over rising household debt", with a particular concern being the "strong flow of domestic credit to real estate". Housing loans by banks grew 18% each year over last three years, while housing loans as a percentage of GDP now stands at 46%, up from 35% three years ago
To read Menon’s speech in full, click here.
To read a profile on Singapore, the "Switzerland of the East", click here.