Goldman Sachs group says up to $4 billion moved from Hong Kong to Singapore amid unrest

Bloomberg | Updated on October 03, 2019 Published on October 03, 2019

File photo   -  REUTERS

Local currency deposits declined in August by 1.6 per cent from the previous month

The potential benefit to Singapore from the turmoil in Hong Kong: $4 billion.

That’s the upper end of an estimate from Goldman Sachs Group Inc of the money investors have moved to Singapore amid escalating political protests in the former British colony. The New York-based bank estimated that there has been a maximum outflow of Hong Kong dollar deposits totalling $3 billion to $4 billion to Singapore, an alternative financial centre for the region, as of August.

Local currency deposits declined in August by 1.6 per cent from the previous month, the biggest drop in more than a year, to about HK$6.84 trillion ($873 billion), the Hong Kong Monetary Authority said earlier this week. Its chief attributed that slump to a dearth of initial public offerings and said there’s been a slight increase in the first three weeks of September. That was before a further escalation in violence in the city.

“We found modest net outflow from HKD deposits in Hong Kong and modest net inflow of FX deposits in Singapore. We believe the debate on Hong Kong outflow/liquidity will remain active and the data points for September (and beyond) critical in shaping the same,” analysts Gurpreet Singh Sahi and Yingqiang Guo wrote in a note to investors.

Foreign currency deposits at both domestic and international banks operating in Singapore rose to a record S$12.8 billion ($9.3 billion) as of August, according to Monetary Authority of Singapore preliminary data. The bulk of the increase took place in July and August, when the figure rose S$5 billion in total, a 64 per cent increase in two months, the data show.

Hong Kong police groups are urging the city to impose curfews and invoke other powers under a controversial colonial era-emergency law, as Chief Executive Carrie Lam struggles to control escalating unrest. Waves of rallies across Hong Kong led to widespread clashes between protesters and police on the National Day holiday on Tuesday, with an officer shooting and wounding a demonstrator for the first time since unrest began almost four months ago.

Hong Kong’s powerful Public Order Ordinance, passed during a wave of riots in 1967, lets the government establish curfews and close areas from public access. The Emergency Regulations Ordinance of 1922 goes further, allowing the chief executive to make any regulations whatsoever to ensure public security, including censorship, snap arrests and property searches and seizures. That ordinance hasn’t been used in more than a half century.

Published on October 03, 2019
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