Unrest drives US$4b to Singapore

Business | Avery Chen 3 Oct 2019

Between US$3 billion and US$4 billion (HK$23.4 billion and HK$31.2 billion) of deposits is estimated to have flowed from Hong Kong to Singapore in the past three months amid the social unrest, according to Goldman Sachs, which projects that the trend will continue.

The news came as the Hongkong and Shanghai Banking Corporation said it would offer preferential rates over the US dollar, to counter the challenges from virtual banks and deposit outflows.

Hong Kong dollar deposits declined by 1.6 percent month-on-month, or HK$111.08 billion, to HK$6.84 trillion in August, recording the biggest drop since May 2018, according to the Hong Kong Monetary Authority.

Meanwhile, Singapore saw a 14 percent growth, or S$1.6 billion (HK$9.05 billion), in foreign currency deposits in August, whilst recording a 5 percent increase for the second month running in foreign residents' deposits, Goldman Sachs said.

Due to political concerns, local banks says inquiries for opening new overseas accounts have risen, with increased interest in Singapore.

The broker added that the surge in foreign deposits in Singapore is mainly thanks to a low base.

Although it estimates a US$3 billion to US$4 billion outflow, the size is much smaller than the total deposits in Hong Kong.

However, this is not enough to ease rising fears about capital flight, with the data after September vital to watch.

Eddie Yue Wai-man, new chief executive of the Hong Kong Monetary Authority, said yesterday the bank hadn't seen significant capital outflows and as an international financial hub, fluctuations in monthly deposits are normal, while deposits have rebounded in the first three weeks of September.

The deposit decline in August was mainly due to decreasing demand for the Hong Kong dollar, with fewer initial public offerings, he added.

Only one company - local subcontractor Hands Form - listed in the stock exchange in August, with a small-size IPO of HK$130 million.

Meanwhile, HSBC is offering preferential interest rates up to 30 basis points higher than traditional channels for customers using digital platforms to put new funds into Hong Kong or US dollar time deposits, a new move to rise to the challenges of new virtual banks and deposit outflows.

Through mobile and personal internet banking, HSBC Jade and Premier customers' six-month Hong Kong dollar time deposit rates for new funds reached 2.55 percent, higher than the US dollar time deposit rates of 2.25 percent.

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