Why Investors in Hong Kong are Choosing to Send Funds to Singapore
Anti-government protests have dragged on for more than six months in Hong Kong, with violent clashes between demonstrators and police showing no sign of letting up. This has fuelled uncertainty about the former British colony’s economic future, after what began as peaceful demonstrations over a now-withdrawn extradition bill developed into a wider call for democracy.
The mayhem hasn’t just paralysed the city’s streets; it’s also taken a heavy toll on business confidence in the territory. Hotels have become eerily quiet. Tables at restaurants that normally teem with diners are empty. And high-profile businesses are considering moving capital or assets elsewhere.
If one place stands to benefit from the turbulence, it’s Hong Kong’s long-time economic sparring partner, Singapore. This rivalry for the coveted title of Asia’s premier financial hub is born out of a shared attribute; they’re both commerce friendly. But can that still be said of Hong Kong in the current climate?
Foreign exchange deposits from Hong Kong to Singapore
The troubles have already led investors and companies to transfer their money to accounts located in Singapore. Goldman Sachs Group Inc. estimate that $3 to $4 billion worth of Hong Kong dollar deposits were made to Singapore between June and August last year. This spike in international currency transfers coincided with the escalating anti-government protests in the Chinese city.
Months of social unrest has left its economy in tatters. So much so that back in November 2019, Hong Kong confirmed it had entered its first recession for a decade. Official figures revealed that its economy shrank 3.2% in the third quarter of 2019, compared with the previous three months.
The Hong Kong government said: “Domestic demand worsened significantly in the third quarter, as the local social incidents took a heavy toll on consumption-related activities and subdued economic prospects weighed on consumption and investment sentiment.”
In contrast, Singapore remains an economic powerhouse and an increasingly attractive destination for tourists, expats and investors. For example, it currently sits second in the World Bank’s ranking of 190 countries for the ease of doing business.
Impact on exchange rates
(Source: Xe.com: XE Currency Charts: HKD to SGD)
Currencies don’t take kindly to economic uncertainty on their own doorstep and the Hong Kong dollar is no different. For example, its value against the Singapore dollar fell off a cliff in October last year, as the protests entered their fourth month and the true extent of the economic impact became apparent. Between 9th October and 4th November 2019, the Hong Kong dollar to Singapore dollar exchange rate dropped rapidly from 0.17624 to 0.17318. The troubles on the streets of Hong Kong were compounded by the escalating US-China trade war and a dip in global growth last year. All of which combined to take a downward pull on the Hong Kong dollar’s value.
Transfer money from Hong Kong to Singapore with RationalFX
With no end in sight to the turmoil that has shaken Hong Kong to its very core, anyone looking to send money to Singapore should consider their exposure to currency market risk. Our currency specialists will work in partnership with you to help reduce the risk of exchange rate fluctuations increasing the cost of your international payments.
Your dedicated currency specialist will monitor the political and economic situation in Hong Kong and its impact on the currency market before you make a money transfer to Singapore, helping you to save both time and money. We offer a range of comprehensive FX products that are designed to help you manage the cost of your international payments by planning ahead. For example, utilising a Forward Contract will allow you to reduce the risk of negative market movements by securing a favourable rate, allowing you to save money when you transfer money from Hong Kong to Singapore.
For more information about how to transfer money from Hong Kong to Singapore, get in contact with our currency specialists who will be happy to answer any questions you may have. Create an account, email email@example.com, or call (+44) 020 7720 8181.
Why choose RationalFX?
Based in the heart of London’s financial district Canary Wharf, RationalFX has traded over $10billion in currencies across the globe. Take advantage of our competitive exchange rates, market expertise, suite of FX products and online payment platform when you make bank to bank transfers in over 50 currencies worldwide.
Whatever your reason for making overseas payments, we’re confident our currency specialists can save you time and money while providing peace of mind. Call our team now on: +44 20 7220 8181