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SINGAPORE (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 Sino-U.S. trade row and the outbreak of the coronavirus pandemic.
The data did not break down the origin of the inflows, but analysts pointed to the turbulence in Hong Kong.
“Hong Kong has been a source of funds for obvious reasons,” said Song Seng Wun, an economist at CIMB Private Banking. He added the pandemic and pressure on regional currencies had also fed fears of a currency crisis and capital flight.
Responding to a query from Reuters, the Monetary Authority of Singapore said in a statement that since mid-2019, there has been a broad-based increase of inflows into Singapore by non-residents from multiple jurisdictions, including Hong Kong.
“These flows have become more volatile in recent months due to the COVID-19 pandemic and resulting market fluctuations,” the central bank said.
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 that while the data gives only a partial picture of flows, it is seen as a good gauge of market sentiment.
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, said Andrea Choong, an analyst at CGS-CIMB Securities.
($1 = 1.4006 Singapore dollars)
