Hong Kong’s Edge Over Singapore
HONG KONG – Bloomberg Intelligence analysts outlined some of the Chinese territory’s competitive advantage over rival financial hub Singapore, according to a recent report from Bloomberg.
First, the take home pay of finance professionals in Hong Kong are significantly higher than those in Singapore. Based on eFinancialCareers’ research last year, annual compensation in the financial sector in the Chinese territory averages about US$300,000, which exceeds that in the city-state by a whopping 52 percent. For finance professionals with more than 10 years of experience, the pay gap could be as high as 66 percent.
Moreover, the effective tax rates for high earners are lower in Hong Kong because of standard tax rate of 15 percent, whereas this income group pay a tax rate of over 20 percent in Singapore.
Despite worries over Hong Kong’s crackdown on civil liberties, another advantage is that the Chinese territory may cement its status as Asia’s asset-management hub this year as mainland China had scrapped its cross-border travel restrictions.
Both at the start of the pandemic in 2020 and in 2019 when massive protests impacted the city, the growth in assets under management (AUM) in Hong Kong outpaced that of Singapore. The disparity stabilised in 2021 when Singapore shifted its strategy to living with COVID-19. However, the analysts think there is a chance that AUM in Hong Kong could recover this year, as affluent Chinese resume travel and investment in the Chinese territory.
Lastly, mainland China and Hong Kong’s removal of strict COVID measures could help give a helping hand to their economy, with the US Federal Reserve is expected to slow down its rate hikes.
In fact, tourists can now travel freely to the Chinese territory without undergoing any quarantine and mandatory COVID testing, putting Hong Kong on an equal footing with Singapore as a commercial hub. Based on consensus by economists, the city’s gross domestic product (GDP) growth could rebound to 2.8 percent in 2023 from a likely fall of 3 percent last year. In comparison, Singapore’s economy is forecasted to grow 2 percent this year, as its earlier reopening perks gradually fade.