Trump’s victory may make life more durable for Hong Kong—and that could be excellent news for Singapore’s banks

“I look ahead to taking our partnership to even better heights,” Wong’s official account posted. “We hope to welcome you again to Singapore quickly!”

The previous few years have been good for Singapore, and issues stand to get higher. The island nation occupies a key place within the area, sustaining shut ties to China and the U.S. at the same time as the 2 powers decouple their economies amid rising tensions.

Singapore’s current development as a monetary heart has typically come on the expense of Hong Kong, its longtime peer and rival that has been pulled nearer to Beijing in recent times. And the return of Trump to the White Home may tip the scales even additional towards Singapore, because the incoming president threatens to tighten the screws on China.

Trump’s election is a “internet constructive for Singapore, internet destructive for Hong Kong,” says Devadas Krishnadas, a former Singapore authorities official and CEO of the Future-Strikes Group, a consulting agency. He predicts U.S. funds will draw back from Hong Kong and its shut hyperlinks to China, and as a substitute proceed their march to Singapore: “Singapore might be seen as the one secure place in Asia for U.S. and European capital.”

International capital from world wide is speeding into Singapore’s monetary establishments, attracted by political stability, a lenient tax regime, and relative neutrality. Belongings underneath administration in Singapore rose to $4.1 trillion in 2023, forward of the $3.9 trillion managed in Hong Kong.

Singapore’s race with Hong Kong to be the preeminent monetary heart of Asia is led by its Massive Three banks: DBS Financial institution, United Abroad Financial institution (UOB), and OverseaChinese Banking Corp. (OCBC).

Led by CEO Helen Wong, OCBC—the oldest of the Massive Three—maybe finest characterizes the nation’s banking sector and finest reveals how Singapore navigates this new future.

“OCBC is possibly probably the most consultant of the Singapore banking sector,” says Michael Makdad, senior fairness analyst at Morningstar. “DBS is bigger in Larger China, however much less exterior Singapore, whereas UOB has a bigger presence exterior Singapore however much less in Larger China. OCBC has each.”

Chinese language capital stays a significant a part of OCBC’s enterprise. Southeast Asia is China’s largest buying and selling companion, having changed the EU in 2020. Bilateral commerce between China and Southeast Asian nations reached $912 billion in 2023.

However China’s funding in Southeast Asia is altering, says Tommy Xie, OCBC’s chief China economist. “Mining was the most important sector receiving funding from China round 10 years in the past,” Xie says. “However now the share has actually diminished. Manufacturing is among the largest proper now.” And far of the cash is in Singapore, which Xie says accounts for simply over half of the Chinese language cash flowing into the area.

Singapore has additionally develop into a secure haven for Chinese language corporations navigating an more and more unfriendly world. The Southeast Asian nation is an effective launching level for Chinese language corporations making an attempt to diversify their provide chains all through the area in a “China Plus One” technique. And a few startups, like fast-fashion platform Shein, have quietly established headquarters in Singapore due, not less than partly, to hopes {that a} non Chinese language residence base may be extra palatable to Western traders.

If Singapore goes to surpass Hong Kong as a monetary hub, core to its technique is wealth administration. The federal government gives tax incentives to single-family places of work that arrange store within the metropolis. As of August, there are actually 1,650 such places of work receiving these tax breaks, up from 400 on the finish of 2020.

Ore Huiying—Bloomberg/Getty Photographs

Wealth administration generated $2.9 billion for OCBC within the first 9 months of the yr. The corporate has designated “Asian wealth” as considered one of its 4 enterprise areas; simply over a 3rd of the financial institution’s earnings is derived from wealth administration. Earlier this yr, Wong pledged to take a position an extra $192 million within the cities of Hong Kong and Macau, and its personal financial institution unveiled a goal to develop Hong Kong property underneath administration by 50% by the tip of 2026.

That might be challenged by the brand new Trump administration. Each the primary Trump administration and the Biden administration imposed sanctions and monetary controls on China—first on particular person corporations, then on complete sectors. Expanded controls underneath a brand new Trump White Home will pressure Singapore’s banks to cease working with sure prospects and sectors.

OCBC sees the pullback of U.S. banks from Hong Kong as a chance to win new prospects. Throughout a visit to the Chinese language metropolis earlier this yr, Wong famous that “increasingly of the Hong Kong prospects select to speak to us, as a substitute of speaking to their Western counterparts.”

OCBC’s official founding dates to 1932, when three native banks merged amid the Nice Despair. The oldest of these predecessor banks dates to 1912, giving OCBC over a century’s value of historical past within the Southeast Asian metropolis.

That very same financial institution, Chinese language Industrial Financial institution, opened a financial institution department in Xiamen—then often known as Amoy—in China’s Fujian province in 1925. That department survived by way of the civil warfare and the Communist takeover, giving OCBC virtually a century of uninterrupted operations in China, uncommon for a overseas financial institution.

For many years, OCBC was the most important of Singapore’s banks, nevertheless it’s since been eclipsed by DBS Financial institution; right now DBS holds round $587 billion in complete property, in contrast with $448 billion for OCBC.

With $18.4 billion in income in 2023, OCBC ranks No. 12 on Fortune’s inaugural Southeast Asia 500 checklist, which ranks the area’s largest corporations by income. (DBS, with $25.6 billion in 2023 income, sits at No. 10, whereas UOB is No. 11 with $19.7 billion.)

OCBC additionally holds a majority stake in Nice Jap, town’s largest life insurance coverage supplier, and gives personal banking by way of the Financial institution of Singapore, acquired from ING in 2009. In 2014, OCBC additionally snapped up Wing Grasp Financial institution, a Hong Kong financial institution, giving it a foothold in each the Chinese language metropolis and the Larger Bay Space, a Chinese language venture to knit collectively the cities of the Pearl River Delta.

Sixty-two % of OCBC’s income is generated in its residence base of Singapore. A lot of its non-Singaporean income comes from two main sources. Southeast Asian markets, primarily Malaysia and Indonesia, contribute 19% of the financial institution’s income; Larger China, a catch-all time period that encapsulates mainland China, Hong Kong, and the island of Taiwan, generates an extra 13%.

Helen Wong took over as OCBC’s CEO in 2021, the primary feminine chief government within the financial institution’s historical past and the primary lady to steer a Singaporean financial institution. She is No. 17 on the Fortune Most Highly effective Ladies checklist for 2024: the second-highest-ranking government from Asia, after Luxshare Precision Business founder Grace Wang. Wong can be on the inaugural Fortune Most Highly effective Folks checklist, at No. 71.

But Wong’s roots lie in Hong Kong. Born there in 1961, she graduated from St. Paul’s Faculty, one of many metropolis’s most prestigious faculties, then from the College of Hong Kong.

Wong’s first banking job was with OCBC, as a administration trainee, in 1981; she shortly turned the financial institution’s first China desk supervisor. She finally moved to HSBC, beginning a decades-long profession that culminated in turning into the financial institution’s chief government for Larger China in 2015.

She returned to OCBC 5 years later, becoming a member of as its deputy president and head of worldwide wholesale banking in 2020. A yr later, the board gave her the nod to develop into the subsequent chief government, particularly pointing to her China expertise.

Hong Kong stays Singapore’s closest competitors. The Chinese language metropolis has struggled in recent times owing to the aftereffects of its powerful COVID-zero coverage, issues over Beijing’s encroaching jurisdiction, and a sluggish Chinese language economic system.

However Hong Kong officers now assume they’ve turned a nook and are providing new incentives to draw the world’s rich, with a objective of luring 200 extra household places of work by the tip of 2025. UBS predicts Hong Kong may overtake Switzerland because the world’s largest hub for cross-border finance as early as 2026.

Hong Kong’s IPO pipeline, whereas removed from the highs of just some years in the past, can be displaying indicators of a revival as Chinese language corporations like equipment producer Midea launch bumper listings within the metropolis.

Singapore’s capital markets, by comparability, are “a whole joke,” says Devadas, the marketing consultant. Singapore “is just not even in the identical ballpark as Hong Kong,” even after the latter’s inventory market took a beating within the wake of the pandemic. Within the first three quarters of the yr, Singapore drew only one IPO; Hong Kong drew 45. Singapore’s authorities has now arrange an official process pressure to deal with the issue.

Hong Kong’s recovering inventory market helped town overtake Singapore as Asia’s main monetary heart on a rating from the China Growth Institute, a China-based assume tank.

But Singapore’s authorities is “unconcerned” about potential competitors from Hong Kong, Devadas says. “They don’t see it as a zero-sum sport.”

“What’s good for Hong Kong is nice for Singapore,” Devadas says, noting that the issues that assist a wholesome Hong Kong economic system—like a wholesome Chinese language economic system—profit Singapore, too.

“However the reverse isn’t essentially true,” he says. Singapore can faucet into different areas far more simply than Hong Kong can, with out the bags of being tied to China.

OCBC, for its half, isn’t selecting between the 2. “They’re each resilient, worldwide monetary facilities enticing to worldwide traders and companies,” Wong writes to Fortune. Hong Kong is vital to the financial institution’s China plans; Singapore to its ASEAN enlargement.

Nonetheless, geopolitics may make life trickier for Singapore, even when Washington doesn’t stress the Southeast Asia nation immediately. Trump’s promise to impose broad tariffs on all imports getting into the U.S. may upend the worldwide buying and selling system, hitting a trade-focused economic system like Singapore’s.

However Trump’s election additionally brings alternatives. Larger stress on China will encourage extra Chinese language corporations to spend money on Southeast Asia—and supply much more alternatives for Singapore’s banks, like OCBC, to profit from these flows. “With extra Chinese language manufacturing coming [to the region], it should profit a financial institution like us,” Wong instructed analysts throughout OCBC’s earnings name on Nov. 8, when the financial institution unveiled file internet earnings for the yr up to now.

“Everybody involves Singapore first to start out an organization,” she stated.

This text seems within the December 2024/January 2025: Asia challenge of Fortune with the headline “Shifting fortunes.”