It’s Always Sunny in Singapore?

Stable Singapore Stakes

Is it true that things (financially-speaking) are that good in Singapore these days? Is that what is making the area so attractive for hedge funds, financiers and investors? Indeed the answer should be a resounding yes. The country is for sure facilitating things for these financiers as “setting up shop” is now deemed as much easier in Singapore than in any other Asian city.

If you just take a look at Hong Kong you will see just how much harder it is for such financiers to work. Indeed, managers of hedge funds alone are doing it tough, being forced to engage in the “same licensing requirements as mutual-fund managers.” Small funds in Singapore will be able to continue operating without having a license at all. Since it is today Singapore and Hong Kong which are the countries that have the most operation of hedge funds, of course these financiers would choose the former over the latter.

Seductive Singapore Taxes

The taxes haven’t always been so attractive in Singapore. But today they are, given what is going on in the UK. Currently the highest taxes for individuals reaches 20 percent in Singapore but the UK recently put their top rate up to a staggering 50 percent. In addition, the whole of Europe – as well as America – in general works on “tougher rules.”

So it makes sense that hedge funds in Singapore saw a significant development, reaching $48bn at the end of 2009 which was a jump of $10bn from just four years earlier. In 2001 there were only 20 hedge funds; two years ago that figure had escalated to 320 hedge fund managers. All predictors are pointing to a continued hedge fund interest looking to “tap Asia as a source of funds as well as a source of excess returns,” over the next year.

Singapore Squeeze?

While this is great for the country, is it so good for the people and the businesses already in existence there? Apparently there is the fear that “the increasing number of global hedge funds is unlikely to crowd out smaller Singapore-based managers.” There will however, be space for “large and niche players” as long as they keep adding “value to investors.” There is now more focus on “transparency and risk management by investors post-crisis,” also, which will lead to hedge fund managers around the world developing their “mid-bank office infrastructure.”

It’s great that Singapore is providing such an attractive environment for financiers around the world and that for sure will help the country’s economy. But at the same time, it has to ensure it looks after its own.

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