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Hong Kong Vs. Singapore: Battle Of Two Asian Tigers

Hong Kong Vs. Singapore: Battle Of Two Asian Tigers. Which Asian Tiger has a stronger economy and stock market?

Hong Kong and Singapore – two of the four “Asian Tigers” – have followed very different paths to development. Hong Kong has traditionally been a gateway to the vast Chinese hinterland. Its strategic location has allowed it to play an important economic role for hundreds of years. Although Singapore has also been a port and trading centre since the 19th century, the “little red dot” made rapid progress only after it became an independent country in 1959.

Today, both Hong Kong and Singapore share many characteristics in common with first-world, developed countries. They have a high per-capita income, poverty is essentially non-existent, and their economies are dominated by the services sector. The following data, culled from World Bank statistics, illustrates how advanced Singapore and the Hong Kong Special Administrative Region (SAR) are when compared with their more populous neighbours.

Although the two countries are neck and neck when various parameters are compared, there has been a gradual shift in their relative positions over the years. Back in 1997, when Hong Kong became a Special Administrative Region of China, its GDP was US$177 billion. At that time, Singapore’s GDP was US$100 billion. By the end of 2016, the picture was totally different. Singapore’s GDP had almost trebled to US$297 billion, while Hong Kong had registered a growth of only 81% in 19 years.

What’s behind Hong Kong’s relative decline? Can it catch up with Singapore and re-establish itself as the leading regional finance and trade centre in the region?


The World Economic Forum’s Global Competitiveness Report for 2017-18 ranks Hong Kong at #6, marking a gain of three places since the previous year. Meanwhile, Singapore is at #3. Only the US and Switzerland rank better.

The Global Competitiveness Report measures every country on the basis of 12 parameters. These include the strength and independence of its institutions, the country’s infrastructure, and its government policies. The study also measures the availability and competence of each country’s labour force, its technical readiness, and culture of innovation.

Singapore scores better than Hong Kong as far as its institutions are concerned. The study gave Singapore 6.1 points on this count as compared to Hong Kong’s 5.7. Both countries have a similar score for “technical readiness” (6.1 vs. 6.2). But Singapore comes out ahead on innovation with 5.3 points compared with Hong Kong’s 4.5.

Hong Kong’s jump of three places in the latest rankings is a reflection of its excellent infrastructure and its strong and stable financial markets.


If there is one area where Hong Kong has a clear lead, it is in its stock market. The Hong Kong Exchange (HKEx) has a total of 2,082 companies listed on its main board and its growth enterprise market (GEM). Its total market capitalisation is in excess of US$4.1 trillion.

The Singapore Exchange (SGX) is much smaller. The market cap of its 749 listed companies stood at US$810 billion at the end of October this year.
Hong Kong’s obvious advantage is its “red chips” and its “H shares.” H shares are securities of companies that have been incorporated in China, but which trade on the HKEx. Red chips are incorporated outside Mainland China, but the majority of their revenue is derived from there. They are also owned, directly or indirectly, by Chinese state entities. Together, H shares and red chips account for almost half the market cap on the HKEx.

Hong Kong’s initial public offering (IPO) market is also much bigger. The HKEx saw 106 IPOs in the first three quarters of 2017, an increase of 56% over the same period in the last year. IPO activity is expected to be pick up pace in the fourth quarter of 2017, and total investment could reach a level of US$19.13 billion.

Singapore’s IPO market is minuscule in comparison. The first half of the year saw only nine initial public offerings, and the total amount that was raised was US$2.2 billion.

In a concerning trend, many Chinese companies that are listed on the Singapore Exchange are delisting themselves from SGX. These departures are either voluntary or are prompted by the company being unable to meet the exchange’s listing requirements.

The companies that have delisted this year include real estate developer China New Town Development, EC World REIT, China Jinjiang Environment Holding, and Dasin Retail Trust.


Switzerland is the world’s top wealth management hub with US$2.4 trillion in assets. But Hong Kong and Singapore are steadily capturing a greater share of the market. The Boston Consulting Group, one of the world’s leading consulting firms, estimates that Singapore’s offshore assets will rise at a compound annual growth rate of 8% through 2021. Hong Kong will do equally well and is expected to register an annual growth rate of 7% during this period. Meanwhile, Switzerland is expected to increase its offshore business by only 3% every year.

Switzerland’s financial institutions currently account for US$2.4 trillion of the world’s total offshore wealth of US$10.3 trillion. Singapore’s share is US$1.2 trillion and Hong Kong’s is US$0.8 trillion.
Singapore’s big three banks are bulking up to capitalise on the growing demand for wealth management services. In the last few years OCBC Bank, UOB, and DBS have made a series of acquisitions that will help them to grow their business volumes.

In 2010, OCBC acquired the wealth management business of ING Asia Private Bank. Three years later, in 2013, UOB purchased ING’s fund management business in Thailand. In 2014, DBS bought Société Générale’s private banking operations in Singapore and Hong Kong. Last year, OCBC made another strategic purchase by acquiring Barclay’s private banking business in Singapore and Hong Kong.


Hong Kong’s proximity to China and its traditional role as a gateway to the mainland give it a tremendous advantage. In the current year, Hong Kong’s GDP is expected to grow at 3% to 4%, which is higher than Singapore’s expected growth rate of 2.5%.

Singapore’s strength lies in its large industrial base, and its ability to quickly realign its resources to meet changing global demand.

The relationship between the two countries is best summed up by Jacky Foo, Singapore’s consul general in Hong Kong, in a remark he made to the South China Morning Post at the time of Singapore’s 50th independence anniversary, “… today the pie is huge – the opportunities in the region are enormous. We should be like twin engines.”