SINGAPORE, June 4 (Reuters) - A record jump in money flowing into Singapore bank accounts from abroad underlines the city-state’s safe haven appeal during the COVID-19 pandemic and political uncertainty in rival financial centre Hong Kong, analysts say.
Singapore fiercely competes with Hong Kong as Asia’s premier wealth centre and generally attracts capital flows during regional turmoil due to its political stability and AAA credit rating.
Deposits from non-residents into the city-state’s banks jumped 44% to a record S$62.14 billion ($44.37 billion) in April from a year earlier, marking the fourth straight monthly rise, central bank data showed.
Deposits have risen in all but one month over the past year, a period marked by escalating political unrest in Hong Kong, a trade tussle between the United States and China, and most recently a virus outbreak which poses the biggest threat to the world economy in nearly a century.
The data did not break down the origin of the inflows, but analysts say Hong Kong was an “obvious” source.
“Hong Kong has been a source of funds for obvious reasons,” said Song Seng Wun, an economist at CIMB Private Banking. But, Song said the pandemic and pressure on regional currencies had fed fears of a currency crisis and capital flight, which were also contributory factors behind the inflows.
The data also showed foreign-currency deposits at banks in Singapore almost quadrupled to a record S$27 billion in April from a year earlier. They were up nearly 200% in the first four months of 2020 from the same period last year.
Non-resident deposits include funds from individuals and companies with registered addresses outside the city-state. Analysts say though the data gives a partial picture of flows, it is seen as a good gauge of market sentiment.
Bankers expect China’s plans to impose national security legislation in Hong Kong could lead to more capital flight.
Andrea Choong, an analyst at CGS-CIMB Securities, said safe haven flows into Singapore should continue as long as regional uncertainties, such as those in Hong Kong and U.S.-China trade tensions, persist. ($1 = 1.4006 Singapore dollars) (Reporting by Aradhana Aravindan and Anshuman Daga in Singapore)