October 8, 2025 • 25 mins
Singapore’s government is investing heavily to become a global hub for finance, commodities and transportation. The spending includes $3 billion for Changi airport’s terminals and infrastructure and equity market reform to attract more capital. Singapore’s household assets could nearly double to $4 trillion by 2030 and the MSCI stock index is set to double in the next five years, according to Morgan Stanley.
Nick Lord, research director for the Asean research department at Morgan Stanley and who authored a report this year on the subject, says the equity market reforms are key to unlocking growth. He discusses the latest developments in the city state with John and Katia.
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Speaker 1 (00:00):
There are two major financial capitals in Asia, and both
seem to always be locked in a battle for the
top spot. Now we've done quite a few episodes on
Hong Kong. Crown this year is Asia's financial capital again
after several years of ceding that to Singapore. So it's
about time that we turned to Singapore, which actually just
celebrated its sixtieth year of independence, and.
Speaker 2 (00:22):
There's a lot to talk about. Changi Airport, one of
the busiest in Asia, is investing about three billion dollars
in terminals and infrastructure. The government is also reforming its
equity market, and offshore companies still favor Singapore for their
Asia headquarters. Singapore's household assets could nearly double to four
trillion by two thousand and thirty, and the MSCI Singapore
(00:44):
Stock Index is also set to double in value over
the next five years. According to Morgan Stanley.
Speaker 1 (00:50):
You're listening to Asia Centric from Bloomberg Intelligence. I'm Kaye
Dimitriev on Hong Kong.
Speaker 2 (00:54):
I'm John Lee also in Hong Kong, and.
Speaker 1 (00:56):
Today we're talking about Singapore as a global hub. We're
speaking with Nick Lord, head of Acon Research for Morgan Stanley,
who also author to report this year on this exact subject,
and he joins us from Singapore, though he did live
for a few years in Hong Kong about fifteen years ago.
Speaker 3 (01:13):
Welcome Nick, Thank you very much. Nice to speak to you.
Speaker 1 (01:16):
Hong Kong was recently renamed Asia's financial capital, but of
course Singapore had that title for quite a while. Do
you think that that is accurate? Which one really reigns supreme?
Speaker 4 (01:28):
So I think it's a good question, and I think
the key thing is that they probably both fulfill slightly
different So if you look at the relative strengths and weaknesses,
I mean, Hong Kong is clearly much ahead of Singapore
in terms of the equity market, in terms of volumes
on the equity market, a number of stocks listed there,
and obviously a large part of that is because of
Hong Kong's role as a conduit for China between to
(01:52):
access sort of the global financial system. Singapore has its
strengths elsewhere. I mean, Singapore is much bigger EFCS center
in Hong Kong. It's ranked number three globally. Singapore, I think,
is a very rapidly growing insurance sector. It's a big
fixed income sector, it's big commodities segment, and obviously is
building a big wealth management offshore center as well. And
(02:14):
the missing piece in the jigsaw, if you like, for
Singapore is that equity market. And that's obviously why the
government has started its review of the equity market and
started to implement a number of measures to try and
make the equity market much more vibrant than it is today.
Speaker 2 (02:29):
Nick, Before we get onto the equity market, I wanted
to just you know, for the benefit of the listener,
can you just describe how rich Singapore is and why
do you think the city state's wealth will double over
the next five years.
Speaker 4 (02:41):
So just to give you an indication, Singapore is, you know,
by per capita wealth and capita GDP is want to
be richest countries in the world. It's also importantly seen
probably the biggest step up in that wealth since two
thousand as well. That has been quite significant, I think
in terms of of how things feel here. Why do
(03:02):
we think wealth will double, Well, household wealth will be
part of it, you know, part of it's just coming
from appreciation of property prices, but also you know, we're
seeing increased growth in non property wealth as well, and
we think that's the interesting area, if you like, because
that's what's got to change over the next few years
is non property wealth becoming a much more important part
(03:25):
of the pie for Singaporeans. So yeah, I mean, it
is a wealthy country and I think that's going to continue.
Speaker 2 (03:32):
I think in Europort you said that the city state
is the fourth richest in the world.
Speaker 3 (03:36):
Yeah, it is.
Speaker 4 (03:37):
It's and when you look at the comparison, you know,
it is other small countries that sort of are up there.
Speaker 3 (03:44):
So it's well ahead of a lot of larger countries.
Speaker 4 (03:46):
And again, just to give you an idea, in terms
of GDP, a capital change from twenty nineteen to twenty
twenty four, it was a twenty three thousand dollars per
capita change in GDP.
Speaker 1 (03:58):
That would be about what like growth of twenty percent
in that period.
Speaker 3 (04:02):
Yeah, so it's higher than sort of Ireland, Switzerland, Luxemburg Us.
Speaker 1 (04:06):
Even Oh interesting. What drove that growth just in the
past few years alone, I mean, because we've seen that
during the pandemic, things weren't great, so we drove that
for Singapore.
Speaker 4 (04:16):
So I think, you know, Singapore has obviously been a
very stable country and that I think has helped wealth
accumulation during this period. I mean in terms of how
it performed during the pandemic, it performed very very well.
If you look at most of the metrics, and I
think you know, it's that continuation of policy and that
continuation of stability that has really helped Singapore accrew about wealth.
Speaker 2 (04:41):
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(05:04):
If you like what you're here, don't forget to subscribe
and share. And Nick, you've talked about how Singapore is
a hub in not just in finance, but transportation, tourism, commodities.
Can you talk about those particular segments.
Speaker 4 (05:19):
Yeah, so, I mean, if you look at commodities and
it's a big commodity trading sector, especially energy trading.
Speaker 3 (05:26):
Singapore obviously is a big port. I can't remember if
it's first or second busiest port in the world.
Speaker 4 (05:31):
But it's up there, and that obviously helps in terms
of ability to actually take physical delivery of commodities, but
also to build a lot of related financial services around
that as well.
Speaker 3 (05:44):
So energy is important.
Speaker 4 (05:46):
I mean, obviously if you go and look at the SGX,
there's a lot of derivative trading on things like iron ore.
Speaker 3 (05:52):
But that's sort of part of the story.
Speaker 4 (05:55):
In terms of hub for transportation, I mean you mentioned
in the intro Changi Airport. I mean that is a
very significant airport, you know, connections to most parts of
the world, so that is very important and people use
it obviously as a hub. Obviously, Singapore has built a
tourism industry but supplements what's happening at Changi. There's been
(06:16):
a lot of focus on creating events. We've had lots
of very high profile concerts here over the last few years.
Speaker 3 (06:24):
Yeah.
Speaker 4 (06:25):
One of them, yeah, Taylor Swift. Yeah, the obvious one
one that everybody talks about. But also you know there's
events here like the f one. So there's a lot
of stuff being done to really build the whole sort
of tourism space around that connectivity space and tourisms three
to four percent of GDP and will continue to grow
now of you.
Speaker 3 (06:44):
And then the other thing that I think is very.
Speaker 4 (06:46):
Important when we talk about sort of Singapore as a
hub is we increasingly think it's going to become a
data imprints hub as well, and that's going to be
important as the world economy changes. So, you know, Singapore,
there's a lot of cables come into Singapore, and so
that means that your internet connectivity is very good and
for the area within fifty kilometers of Singapore, you basically
(07:09):
have a very very low latency, and so that allows
you to build data centers not only here, but in
Johor and in Batan, which is just across the Straits
in Indonesia.
Speaker 3 (07:19):
And in Singapore.
Speaker 4 (07:20):
What we've got is really a focus on the higher
value added part of that, which is the data inference
and so there's a lot of infrastructure being built around
that as well.
Speaker 1 (07:29):
And now getting to something that you really wanted to
talk about, which is, of course the equity market reforms
is a big part of this as well, and the
growth that you're seeing in the next couple of years.
So can you talk a bit about what those reforms are.
I mean, first of all, why is it so important
in your view to do it and then maybe going
a bit into what they actually are.
Speaker 4 (07:47):
Yeah, so if you go back to the basics of
some of the things that Singapore is going to have
to deal with, we've spoken about how Singapore has been
on the journey. So immediately after independence in nineteen sixty five, Singapore.
Speaker 3 (08:00):
Or basically had to create jobs.
Speaker 4 (08:02):
So it went through this route of job creation and
then you really have to go down this route to
value creation. So jobs have been created, but how do
you create high value jobs? And how do you create
companies that are of value and can be globally competitive.
And now what we think you're going into is a
period of wealth creation. So this is about sort of
(08:23):
unlocking the value of what you've built on so far
and generating wealth of the population. Now we've said, look,
have already been very successful at that. This becomes more
important because obviously, like most other countries in the world,
you have an aging demographic in Singapore, and so people
are going to need wealth in order to sustain themselves
into their retirement. And so the equity market reform is
(08:45):
one of the enablers, if you like, but will help
that wealth to be created and The problem you've got
is that at the moment, the Singapore equity market really
isn't that big or that significant.
Speaker 1 (08:57):
Yeah, like if we compare it to Hong Kong's, you know,
like in terms of size, it's.
Speaker 4 (09:02):
Clearly much smaller than Hong Kong that members just over
a billion dollars a day traded on the Singapore market.
Speaker 3 (09:09):
So obviously it's very small compared to Hong Kong.
Speaker 4 (09:12):
And so what you often have people say is that
Singapore market is small, it's not interesting. That creates problems
in terms of especially getting stocks listed in Singapore because
people think that they can't get the valuation they want.
And so if you've got a lot of interesting companies
to list, and just to give you an idea, Singapore
has the third highest number of unicorns in Asia after
(09:35):
China and India, then how do you get these companies
to list in Singapore? How do you get them to
lock into Singapore? And obviously that brings with it sort
of higher paying jobs, head office type jobs. It also
means that you're going to keep R and D and
things like that in Singapore. So it's very important in
terms of anchoring companies here, but also getting the equity
market to function, to be deeper and to be more
(09:58):
liquid is importantly in terms of wealth creation as well,
because then you can lock those gains in for people here.
Speaker 3 (10:05):
So that's what you're trying to do.
Speaker 4 (10:08):
And the fact is that there are very good examples
that would disprove that view that people have of Singapore market.
So there are stocks out there that do trade at
premiums to global peers, which disproves this idea that you
can't get a proper valuation in Singapore. What these equity
market reforms are about doing is widening that out. So
(10:31):
how do we make sure that more and more companies
can get those valuations, More and more companies can be
we can get liquidity, we can get more trading on
the exchange. And if we do that then then it
obviously just adds to that overall story of Singapore. So
it's quite important, and that's why the government has been
working on these reforms over last year or so.
Speaker 1 (10:52):
What does that actually look like like? What's one of
you know, the changes for example, that they're considering.
Speaker 4 (11:00):
You know, given what we just said about relative size,
and obviously Singapore lacks that natural hinterland that Hong Kong
as an equity market has. Yeah, So what you have
to do is you have to undertake quite a thorough
and quite a broad range of reforms, and I think
what the government's doing is trying to do that. So
(11:22):
what have we seen so far, Well, one thing the
government has been working hard to do is to create
the right conditions to build up byside capabilities in Singapore.
The key part of that is the Equity Market Fund
has been set up by MAS It's five billion Singapore dollars,
it's about four billion US dollars and we think that
(11:43):
will be allocated amongst sixteen different asset managers with different styles,
different investment techniques being allocated. About one point one billion
of funds being allocated to three of those managers at
the moment. And what that should do is beginning to
create a pool of money that is traded between people
(12:03):
in Singapore and therefore that helps to deepen the liquidity
on the exchange. Now, as part of the process of
applying for those funds, asset managers have been asked to
crowd in more money so that five billion becomes more
than five billion and hopefully therefore becomes much more meaningful
over time. As an amount of money to trade on
(12:24):
the exchange, So that's trying to address some of the
liquidity issues and some of the trading issues. There's obviously
also been tax incentives to set up funds and to
set up asset management businesses in Singapore for a tax
incentives to encourage companies to list on the Singapore market.
Another strand of what's been done is to try and
(12:44):
build out cell side research in Singapore. So there's a
fund being set up by MAS administered by SGX, and
that is basically to put money into the cell side
to get coverage of smaller cap stocks and stocksford are
less well covered in the market. So you know, you're
building a research ecosystem, you're building a buyside ecosystem. And
(13:05):
then the final thing that we expect will be announced
will be measures to encourage companies to adopt policies that
create value for shareholders or to be more focused on
shareholder value than perhaps they will.
Speaker 3 (13:19):
Have been in the past.
Speaker 4 (13:21):
And I think you know, there are some very good
examples of companies in Singapore that have started to move
down that route and have got for rewards in terms
of a share price and what I think the government
measures will be trying to do is to widen that pool.
So effectively, you're supplementing the buyside to invest in the stocks.
You're creating or supplementing the sell side to create the
(13:43):
knowledge ecosystem around the stocks. And then what you're doing
is working on getting more and more interesting companies I've
already listed companies, make them more investable, and ultimately hopefully
bringing in new companies onto the exchange to make the
whole exchange much more investable.
Speaker 2 (13:59):
Nick those measures to improve shareholder returns, are they analogous
to some of the corporate governance reforms we've seen in
countries like Japan, South Korea and China to extent as well.
Speaker 4 (14:10):
Or we don't know, yeah, because we're still waiting to
see what they are, So, you know, I expect there
will be an announcement at some stage before the end
of this year on this, so we'll have to see,
but our expectation is that, yes, they will be along
the lines of sort of or taking elements of what
you've seen in other countries such as Career Japan or
(14:31):
even China.
Speaker 1 (14:32):
There's sort of the infrastructure we talked about equity market
kind of infrastructure but there's also a lot of physical
infrastructure that the city is investing in quite a bit.
So chiny Airport, I believe there's terminal five is going
to be opening. They've announced in billions of dollars in
investment in upgrading the airport as well, which if you've
(14:53):
been there, I'm not sure what could use upgrading because
it's very modern and quite.
Speaker 2 (14:58):
Voted the world's best airport by am Tracks, I believe.
Speaker 1 (15:01):
I mean it's beautiful too. You know the number of
people who kind of gather at that fountain, you know,
it's incredible. Yeah, I just wonder if yeah, what are
some of the sort of physical infrastructure that the government's
investing in and how much do you see that playing
into the growth of the economy as well.
Speaker 4 (15:18):
So I think for Singapore, what we're trying to do
is make ease of doing things, improve the ease of
doing things. So Chanya Airport is a good example. You
build more terminals therefore you don't get overcrowded, build second
runway so you can bring more flights. And I don't
know if you've been through the new immigration terminals, but
(15:39):
if you're a resident or a citizen of Singapore, you
just walk up to the terminal. It knows who you
are from your face and you just walk through. You
don't even have to put your passport into machine. You
know other things we've seen, I mean the underground network,
the mrt'd be massively expanded over the last few years,
so the ability to get from point A to point
(15:59):
B is becoming simpler and simpler. And obviously you have
a road network which is very very comprehensive, very well designed.
So all of these things are easy. If you think
about things like way we make payments. We have something
called pay now, which I think is similar to what
you have in Hong Kong called fast or FPS.
Speaker 3 (16:19):
I think it is in Hong Kong.
Speaker 4 (16:21):
You know, you can transfer money between mobile phones, you
can make payments in cruble easy. I mean I literally
probably get at the beginning of the year the contents
of lice packets from a firm, which is probably about
forty dollars or something like that, and that's all I
spend in cash terms.
Speaker 3 (16:41):
For the whole year.
Speaker 4 (16:42):
The rest of it is all done electronically, and so
there's a lot of things like this that just make
life very very easy, and obviously that stimulates economic growth,
because if you remove all those frictions, then you just
get more done.
Speaker 2 (16:56):
Nick when I was last in Singapore, imide a client.
He's an asset manager and he also moved from Hong
Kong to Singapore, and he said, John, look if McKinsey
or Goldman Sachs or Morgan Stanley was a government, it
would look like the Singapore government. And what he was
saying is like, it's incredibly smart. It has a long
term strategic plan and it executes. Like how is a
(17:17):
Singapore government able to execute on all these plans so effectively?
Speaker 4 (17:23):
I mean, difficult for me to answer without being involved
in the government, But I think you just have to
look at the track record. Emani, it does, and you
know that shows up in the GDP growth, it shows
up in the wealth of the country, and I think
this is a very important thing to look at. If
you go back to twenty ten, there was a realization
in the government that they needed to improve productivity. But
(17:44):
a lot of newspaper articles that productivity wasn't particularly high
in Singapore and this needed to change if you were
going to get strong growth, And so they had a
look at how you would improve productivity in economy and
lots of things came out of it from giving businesses
grants to sort of see how they could modernize machines
in place instead of using you know, low value add
(18:07):
labor and things like that. And if you look at
the data on productivity, pretty much from that starting point
in twenty ten, we've seen that think something like two
point three or two point six percent perannum improvement in
productivity and that that's what's driven GDP growth. And so
the answer to your question is is I think they
(18:27):
look what are the underlying causes of whatever problem they
want to solve, They study it, and then they they
execute on it, and that's where you get results coming through.
If you look at the GDP growth that we're forecasting
for Singapore in the period twenty thirty, we're forecasting three
percent GDP growth, well, a large part of that is
(18:48):
coming from continued improvement in productivity. And again it's you know,
it's careful planning about how do we improve productivity and
you know that will deliver the things we need to
deliver on to get us to where we want to go.
Speaker 1 (18:59):
Are the sectors that are driving that productivity? Like is
it tech? Is it finance or is it kind of
a mix.
Speaker 4 (19:06):
You know, I think you started this whole presentation talking
about hubs and we're going to talk about how it's
a hub economy. It is the hub industries, but really
have driven that productivity over the last few years. So
hub industries, which are things like finance, you know, export,
the export sector is important as well. They've gone from
fifty seven percent of the economy to sixty three percent
(19:29):
of the economy and those hub industries have been the
largest contributors to productivity growth. So that is where it
is coming from, and that's been very important driver about
GDP growth statistic.
Speaker 1 (19:44):
What would you say, is then kind of standing in
the way or the biggest challenge for the government is
it to duce those productivity numbers further? Is it this
equity market reform? Is it developing new industries? You know,
it feels like a lot of cities are now getting
into AI data, is building that out? What's kind of
standing in the way.
Speaker 4 (20:03):
So I think if you think about challenges that Singapore faces,
they're the challenges that a lot of other countries face.
So an aging population is a challenge. Transition in terms
of digital transformation of economies. You know, that's a challenge.
It creates opportunities, but it also creates threats. Energy transition
(20:25):
is a challenge, and in Singapore's case that we spoke
about drivers of the financial services markets and I spoke
a little bit about how it is an energy trading center. Well,
one of the issues that you face is that if
the world electrifies, electricity is generated locally, and so you
don't need to.
Speaker 3 (20:43):
Be shipping coal or oil or whatever around.
Speaker 4 (20:46):
The world because you know, if you find other ways
to generate electricity. So one of the things that you
have to do, obviously is you have to respond to that.
And in each of these cases, what we're arguing in
our report is that that Singapore seems to have a
solution to these problems. So in terms of energy transition,
we think Singapore is building itself up to be an
(21:07):
L and G hub, for example, which is a transition
fuel and ultimately, if it gets that right and we
get developmentto NAZI and grid, it can become an electricity
trading hub. If you look at longevity, if your population
is aging, then you basically have to put in a
lot of reforms to improve productivity because you have to
make each unit of labor generate more than it did
(21:30):
do in the past. And if you look at a
lot of the work that Singapore is doing, for example,
to try and make it easier for people to exist
here in their old age. So just simple things like
making the infrastructure more accessible to people who are maybe
less physically mobile than they were in the past. Measures
in the housing market to encourage people to leave closer
(21:53):
to their parents so then you have family.
Speaker 3 (21:55):
Support as for population ages.
Speaker 4 (21:58):
So it does face the challenges that everybody else faces.
But the key thing is if you do this it's
right you try and come up with the policy responses
that enable you to mitigate or overcome those challenges.
Speaker 2 (22:11):
The nick just to expand on what Krtia was talking about.
What could go wrong with this poolish case on Singapore,
Like it is becoming much more expensive to run a
business out of the city state. We saw rental prices
really skyrocket during COVID competitively, like on a cost basis,
it must be disadvantaged versus saying Malaysia or Indonesia. If
(22:33):
you were saying to you want to start up a
data center, for example, yeah.
Speaker 4 (22:37):
I mean yes, cost is a challenge you mentioned earlier
on Increased competition is also a challenge. Singapore is not
being left to do this on its own, it's seeing
competition from elsewhere. So definitely those are areas that you
have to think about. We've also highlighted I mean, geopolitics
is more challenging, but it was Singapore really has benefited
(22:59):
from a rules based order, and so if you're a
small city state, it becomes more challenging if that shows
some strainths. So those are the sort of challenges it
faces in terms of costs. One of the things you'll
have seen in the press is the Singapore johor Special
Economic Zone, and that's one of the responses to that
is to try and you know I spoke about data
(23:22):
centers and data influence. You get some of the lower
value added stuff done maybe where land is more available,
and then you focus on some of the things like
data inference rather than just for pure data center in
Singapore where your land constrained and to a certain extent
power constraint as well. So yeah, it faces lots of
(23:44):
there are lots of hurdles and obstacles to overcome, and
so ultimately you're making a bet as to whether or
not the policies to overcome those are are going to
be successful.
Speaker 1 (23:56):
Just so, John was asking a question about rents rising,
and I just wonder what it's like to live in Singapore,
especially because we talk about cities retaining talent. You know,
the demographics are changing globally, I mean more or less
depending on what country or city you're in, but everyone's
fighting for this talent. So I wonder how Singapore is
(24:18):
working to try to get more of that talent to
go there, as opposed to I don't know, like Hong
Kong or New York or wherever. Toronto, you know where
I'm from. You know in Toronto is a global capital
for that as well. So sort of on the ground,
what are some things that the city is doing but
maybe could do better too.
Speaker 4 (24:41):
I mean a lot people move to a city because
there are good jobs and interesting jobs, and that's what
these and people move there. So that's why you're developing
things like financial services up, why you're developing a lot
of new technology industry, because you're trying to get those
attractive jobs into saying and Matt, how's the benefit of
(25:01):
local population as well? I mean, I think ninety percent
of people who work in financial services at Singaporean, so
you know, it creates jobs elsewhere. People come here for education.
There's obviously good set of international schools. There's universities that
are internationally recognized and moving up the rankings. I think
people move here for healthcare. You know, healthcare is very
(25:25):
good here.
Speaker 3 (25:26):
An ease of going about your daily life.
Speaker 4 (25:28):
As I said before, you know, it takes me whatever
twenty five minutes some of us to get into the office.
Speaker 3 (25:33):
Summer bardings so.
Speaker 1 (25:36):
Well, Thank you so much for joining us today.
Speaker 3 (25:38):
You're very welcome.
Speaker 2 (25:39):
Thank you you've been listening to Asycentric from Bloomberg Intelligence.
I'm John Lee in Hong Kong.
Speaker 1 (25:45):
I'm gadjd Me Triva, also in Hong Kong. You can
listen to all our episodes on Spotify, Apple Podcasts, or
wherever you listen. And this episode was produced and edited
by Clara Chen. Thanks so much for joining us
There are two major financial capitals in Asia, and both
seem to always be locked in a battle for the
top spot. Now we've done quite a few episodes on
Hong Kong. Crown this year is Asia's financial capital again
after several years of ceding that to Singapore. So it's
about time that we turned to Singapore, which actually just
celebrated its sixtieth year of independence, and.
Speaker 2 (00:22):
There's a lot to talk about. Changi Airport, one of
the busiest in Asia, is investing about three billion dollars
in terminals and infrastructure. The government is also reforming its
equity market, and offshore companies still favor Singapore for their
Asia headquarters. Singapore's household assets could nearly double to four
trillion by two thousand and thirty, and the MSCI Singapore
(00:44):
Stock Index is also set to double in value over
the next five years. According to Morgan Stanley.
Speaker 1 (00:50):
You're listening to Asia Centric from Bloomberg Intelligence. I'm Kaye
Dimitriev on Hong Kong.
Speaker 2 (00:54):
I'm John Lee also in Hong Kong, and.
Speaker 1 (00:56):
Today we're talking about Singapore as a global hub. We're
speaking with Nick Lord, head of Acon Research for Morgan Stanley,
who also author to report this year on this exact subject,
and he joins us from Singapore, though he did live
for a few years in Hong Kong about fifteen years ago.
Speaker 3 (01:13):
Welcome Nick, Thank you very much. Nice to speak to you.
Speaker 1 (01:16):
Hong Kong was recently renamed Asia's financial capital, but of
course Singapore had that title for quite a while. Do
you think that that is accurate? Which one really reigns supreme?
Speaker 4 (01:28):
So I think it's a good question, and I think
the key thing is that they probably both fulfill slightly
different So if you look at the relative strengths and weaknesses,
I mean, Hong Kong is clearly much ahead of Singapore
in terms of the equity market, in terms of volumes
on the equity market, a number of stocks listed there,
and obviously a large part of that is because of
Hong Kong's role as a conduit for China between to
(01:52):
access sort of the global financial system. Singapore has its
strengths elsewhere. I mean, Singapore is much bigger EFCS center
in Hong Kong. It's ranked number three globally. Singapore, I think,
is a very rapidly growing insurance sector. It's a big
fixed income sector, it's big commodities segment, and obviously is
building a big wealth management offshore center as well. And
(02:14):
the missing piece in the jigsaw, if you like, for
Singapore is that equity market. And that's obviously why the
government has started its review of the equity market and
started to implement a number of measures to try and
make the equity market much more vibrant than it is today.
Speaker 2 (02:29):
Nick, Before we get onto the equity market, I wanted
to just you know, for the benefit of the listener,
can you just describe how rich Singapore is and why
do you think the city state's wealth will double over
the next five years.
Speaker 4 (02:41):
So just to give you an indication, Singapore is, you know,
by per capita wealth and capita GDP is want to
be richest countries in the world. It's also importantly seen
probably the biggest step up in that wealth since two
thousand as well. That has been quite significant, I think
in terms of of how things feel here. Why do
(03:02):
we think wealth will double, Well, household wealth will be
part of it, you know, part of it's just coming
from appreciation of property prices, but also you know, we're
seeing increased growth in non property wealth as well, and
we think that's the interesting area, if you like, because
that's what's got to change over the next few years
is non property wealth becoming a much more important part
(03:25):
of the pie for Singaporeans. So yeah, I mean, it
is a wealthy country and I think that's going to continue.
Speaker 2 (03:32):
I think in Europort you said that the city state
is the fourth richest in the world.
Speaker 3 (03:36):
Yeah, it is.
Speaker 4 (03:37):
It's and when you look at the comparison, you know,
it is other small countries that sort of are up there.
Speaker 3 (03:44):
So it's well ahead of a lot of larger countries.
Speaker 4 (03:46):
And again, just to give you an idea, in terms
of GDP, a capital change from twenty nineteen to twenty
twenty four, it was a twenty three thousand dollars per
capita change in GDP.
Speaker 1 (03:58):
That would be about what like growth of twenty percent
in that period.
Speaker 3 (04:02):
Yeah, so it's higher than sort of Ireland, Switzerland, Luxemburg Us.
Speaker 1 (04:06):
Even Oh interesting. What drove that growth just in the
past few years alone, I mean, because we've seen that
during the pandemic, things weren't great, so we drove that
for Singapore.
Speaker 4 (04:16):
So I think, you know, Singapore has obviously been a
very stable country and that I think has helped wealth
accumulation during this period. I mean in terms of how
it performed during the pandemic, it performed very very well.
If you look at most of the metrics, and I
think you know, it's that continuation of policy and that
continuation of stability that has really helped Singapore accrew about wealth.
Speaker 2 (04:41):
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(05:04):
If you like what you're here, don't forget to subscribe
and share. And Nick, you've talked about how Singapore is
a hub in not just in finance, but transportation, tourism, commodities.
Can you talk about those particular segments.
Speaker 4 (05:19):
Yeah, so, I mean, if you look at commodities and
it's a big commodity trading sector, especially energy trading.
Speaker 3 (05:26):
Singapore obviously is a big port. I can't remember if
it's first or second busiest port in the world.
Speaker 4 (05:31):
But it's up there, and that obviously helps in terms
of ability to actually take physical delivery of commodities, but
also to build a lot of related financial services around
that as well.
Speaker 3 (05:44):
So energy is important.
Speaker 4 (05:46):
I mean, obviously if you go and look at the SGX,
there's a lot of derivative trading on things like iron ore.
Speaker 3 (05:52):
But that's sort of part of the story.
Speaker 4 (05:55):
In terms of hub for transportation, I mean you mentioned
in the intro Changi Airport. I mean that is a
very significant airport, you know, connections to most parts of
the world, so that is very important and people use
it obviously as a hub. Obviously, Singapore has built a
tourism industry but supplements what's happening at Changi. There's been
(06:16):
a lot of focus on creating events. We've had lots
of very high profile concerts here over the last few years.
Speaker 3 (06:24):
Yeah.
Speaker 4 (06:25):
One of them, yeah, Taylor Swift. Yeah, the obvious one
one that everybody talks about. But also you know there's
events here like the f one. So there's a lot
of stuff being done to really build the whole sort
of tourism space around that connectivity space and tourisms three
to four percent of GDP and will continue to grow
now of you.
Speaker 3 (06:44):
And then the other thing that I think is very.
Speaker 4 (06:46):
Important when we talk about sort of Singapore as a
hub is we increasingly think it's going to become a
data imprints hub as well, and that's going to be
important as the world economy changes. So, you know, Singapore,
there's a lot of cables come into Singapore, and so
that means that your internet connectivity is very good and
for the area within fifty kilometers of Singapore, you basically
(07:09):
have a very very low latency, and so that allows
you to build data centers not only here, but in
Johor and in Batan, which is just across the Straits
in Indonesia.
Speaker 3 (07:19):
And in Singapore.
Speaker 4 (07:20):
What we've got is really a focus on the higher
value added part of that, which is the data inference
and so there's a lot of infrastructure being built around
that as well.
Speaker 1 (07:29):
And now getting to something that you really wanted to
talk about, which is, of course the equity market reforms
is a big part of this as well, and the
growth that you're seeing in the next couple of years.
So can you talk a bit about what those reforms are.
I mean, first of all, why is it so important
in your view to do it and then maybe going
a bit into what they actually are.
Speaker 4 (07:47):
Yeah, so if you go back to the basics of
some of the things that Singapore is going to have
to deal with, we've spoken about how Singapore has been
on the journey. So immediately after independence in nineteen sixty five, Singapore.
Speaker 3 (08:00):
Or basically had to create jobs.
Speaker 4 (08:02):
So it went through this route of job creation and
then you really have to go down this route to
value creation. So jobs have been created, but how do
you create high value jobs? And how do you create
companies that are of value and can be globally competitive.
And now what we think you're going into is a
period of wealth creation. So this is about sort of
(08:23):
unlocking the value of what you've built on so far
and generating wealth of the population. Now we've said, look,
have already been very successful at that. This becomes more
important because obviously, like most other countries in the world,
you have an aging demographic in Singapore, and so people
are going to need wealth in order to sustain themselves
into their retirement. And so the equity market reform is
(08:45):
one of the enablers, if you like, but will help
that wealth to be created and The problem you've got
is that at the moment, the Singapore equity market really
isn't that big or that significant.
Speaker 1 (08:57):
Yeah, like if we compare it to Hong Kong's, you know,
like in terms of size, it's.
Speaker 4 (09:02):
Clearly much smaller than Hong Kong that members just over
a billion dollars a day traded on the Singapore market.
Speaker 3 (09:09):
So obviously it's very small compared to Hong Kong.
Speaker 4 (09:12):
And so what you often have people say is that
Singapore market is small, it's not interesting. That creates problems
in terms of especially getting stocks listed in Singapore because
people think that they can't get the valuation they want.
And so if you've got a lot of interesting companies
to list, and just to give you an idea, Singapore
has the third highest number of unicorns in Asia after
(09:35):
China and India, then how do you get these companies
to list in Singapore? How do you get them to
lock into Singapore? And obviously that brings with it sort
of higher paying jobs, head office type jobs. It also
means that you're going to keep R and D and
things like that in Singapore. So it's very important in
terms of anchoring companies here, but also getting the equity
market to function, to be deeper and to be more
(09:58):
liquid is importantly in terms of wealth creation as well,
because then you can lock those gains in for people here.
Speaker 3 (10:05):
So that's what you're trying to do.
Speaker 4 (10:08):
And the fact is that there are very good examples
that would disprove that view that people have of Singapore market.
So there are stocks out there that do trade at
premiums to global peers, which disproves this idea that you
can't get a proper valuation in Singapore. What these equity
market reforms are about doing is widening that out. So
(10:31):
how do we make sure that more and more companies
can get those valuations, More and more companies can be
we can get liquidity, we can get more trading on
the exchange. And if we do that then then it
obviously just adds to that overall story of Singapore. So
it's quite important, and that's why the government has been
working on these reforms over last year or so.
Speaker 1 (10:52):
What does that actually look like like? What's one of
you know, the changes for example, that they're considering.
Speaker 4 (11:00):
You know, given what we just said about relative size,
and obviously Singapore lacks that natural hinterland that Hong Kong
as an equity market has. Yeah, So what you have
to do is you have to undertake quite a thorough
and quite a broad range of reforms, and I think
what the government's doing is trying to do that. So
(11:22):
what have we seen so far, Well, one thing the
government has been working hard to do is to create
the right conditions to build up byside capabilities in Singapore.
The key part of that is the Equity Market Fund
has been set up by MAS It's five billion Singapore dollars,
it's about four billion US dollars and we think that
(11:43):
will be allocated amongst sixteen different asset managers with different styles,
different investment techniques being allocated. About one point one billion
of funds being allocated to three of those managers at
the moment. And what that should do is beginning to
create a pool of money that is traded between people
(12:03):
in Singapore and therefore that helps to deepen the liquidity
on the exchange. Now, as part of the process of
applying for those funds, asset managers have been asked to
crowd in more money so that five billion becomes more
than five billion and hopefully therefore becomes much more meaningful
over time. As an amount of money to trade on
(12:24):
the exchange, So that's trying to address some of the
liquidity issues and some of the trading issues. There's obviously
also been tax incentives to set up funds and to
set up asset management businesses in Singapore for a tax
incentives to encourage companies to list on the Singapore market.
Another strand of what's been done is to try and
(12:44):
build out cell side research in Singapore. So there's a
fund being set up by MAS administered by SGX, and
that is basically to put money into the cell side
to get coverage of smaller cap stocks and stocksford are
less well covered in the market. So you know, you're
building a research ecosystem, you're building a buyside ecosystem. And
(13:05):
then the final thing that we expect will be announced
will be measures to encourage companies to adopt policies that
create value for shareholders or to be more focused on
shareholder value than perhaps they will.
Speaker 3 (13:19):
Have been in the past.
Speaker 4 (13:21):
And I think you know, there are some very good
examples of companies in Singapore that have started to move
down that route and have got for rewards in terms
of a share price and what I think the government
measures will be trying to do is to widen that pool.
So effectively, you're supplementing the buyside to invest in the stocks.
You're creating or supplementing the sell side to create the
(13:43):
knowledge ecosystem around the stocks. And then what you're doing
is working on getting more and more interesting companies I've
already listed companies, make them more investable, and ultimately hopefully
bringing in new companies onto the exchange to make the
whole exchange much more investable.
Speaker 2 (13:59):
Nick those measures to improve shareholder returns, are they analogous
to some of the corporate governance reforms we've seen in
countries like Japan, South Korea and China to extent as well.
Speaker 4 (14:10):
Or we don't know, yeah, because we're still waiting to
see what they are, So, you know, I expect there
will be an announcement at some stage before the end
of this year on this, so we'll have to see,
but our expectation is that, yes, they will be along
the lines of sort of or taking elements of what
you've seen in other countries such as Career Japan or
(14:31):
even China.
Speaker 1 (14:32):
There's sort of the infrastructure we talked about equity market
kind of infrastructure but there's also a lot of physical
infrastructure that the city is investing in quite a bit.
So chiny Airport, I believe there's terminal five is going
to be opening. They've announced in billions of dollars in
investment in upgrading the airport as well, which if you've
(14:53):
been there, I'm not sure what could use upgrading because
it's very modern and quite.
Speaker 2 (14:58):
Voted the world's best airport by am Tracks, I believe.
Speaker 1 (15:01):
I mean it's beautiful too. You know the number of
people who kind of gather at that fountain, you know,
it's incredible. Yeah, I just wonder if yeah, what are
some of the sort of physical infrastructure that the government's
investing in and how much do you see that playing
into the growth of the economy as well.
Speaker 4 (15:18):
So I think for Singapore, what we're trying to do
is make ease of doing things, improve the ease of
doing things. So Chanya Airport is a good example. You
build more terminals therefore you don't get overcrowded, build second
runway so you can bring more flights. And I don't
know if you've been through the new immigration terminals, but
(15:39):
if you're a resident or a citizen of Singapore, you
just walk up to the terminal. It knows who you
are from your face and you just walk through. You
don't even have to put your passport into machine. You
know other things we've seen, I mean the underground network,
the mrt'd be massively expanded over the last few years,
so the ability to get from point A to point
(15:59):
B is becoming simpler and simpler. And obviously you have
a road network which is very very comprehensive, very well designed.
So all of these things are easy. If you think
about things like way we make payments. We have something
called pay now, which I think is similar to what
you have in Hong Kong called fast or FPS.
Speaker 3 (16:19):
I think it is in Hong Kong.
Speaker 4 (16:21):
You know, you can transfer money between mobile phones, you
can make payments in cruble easy. I mean I literally
probably get at the beginning of the year the contents
of lice packets from a firm, which is probably about
forty dollars or something like that, and that's all I
spend in cash terms.
Speaker 3 (16:41):
For the whole year.
Speaker 4 (16:42):
The rest of it is all done electronically, and so
there's a lot of things like this that just make
life very very easy, and obviously that stimulates economic growth,
because if you remove all those frictions, then you just
get more done.
Speaker 2 (16:56):
Nick when I was last in Singapore, imide a client.
He's an asset manager and he also moved from Hong
Kong to Singapore, and he said, John, look if McKinsey
or Goldman Sachs or Morgan Stanley was a government, it
would look like the Singapore government. And what he was
saying is like, it's incredibly smart. It has a long
term strategic plan and it executes. Like how is a
(17:17):
Singapore government able to execute on all these plans so effectively?
Speaker 4 (17:23):
I mean, difficult for me to answer without being involved
in the government, But I think you just have to
look at the track record. Emani, it does, and you
know that shows up in the GDP growth, it shows
up in the wealth of the country, and I think
this is a very important thing to look at. If
you go back to twenty ten, there was a realization
in the government that they needed to improve productivity. But
(17:44):
a lot of newspaper articles that productivity wasn't particularly high
in Singapore and this needed to change if you were
going to get strong growth, And so they had a
look at how you would improve productivity in economy and
lots of things came out of it from giving businesses
grants to sort of see how they could modernize machines
in place instead of using you know, low value add
(18:07):
labor and things like that. And if you look at
the data on productivity, pretty much from that starting point
in twenty ten, we've seen that think something like two
point three or two point six percent perannum improvement in
productivity and that that's what's driven GDP growth. And so
the answer to your question is is I think they
(18:27):
look what are the underlying causes of whatever problem they
want to solve, They study it, and then they they
execute on it, and that's where you get results coming through.
If you look at the GDP growth that we're forecasting
for Singapore in the period twenty thirty, we're forecasting three
percent GDP growth, well, a large part of that is
(18:48):
coming from continued improvement in productivity. And again it's you know,
it's careful planning about how do we improve productivity and
you know that will deliver the things we need to
deliver on to get us to where we want to go.
Speaker 1 (18:59):
Are the sectors that are driving that productivity? Like is
it tech? Is it finance or is it kind of
a mix.
Speaker 4 (19:06):
You know, I think you started this whole presentation talking
about hubs and we're going to talk about how it's
a hub economy. It is the hub industries, but really
have driven that productivity over the last few years. So
hub industries, which are things like finance, you know, export,
the export sector is important as well. They've gone from
fifty seven percent of the economy to sixty three percent
(19:29):
of the economy and those hub industries have been the
largest contributors to productivity growth. So that is where it
is coming from, and that's been very important driver about
GDP growth statistic.
Speaker 1 (19:44):
What would you say, is then kind of standing in
the way or the biggest challenge for the government is
it to duce those productivity numbers further? Is it this
equity market reform? Is it developing new industries? You know,
it feels like a lot of cities are now getting
into AI data, is building that out? What's kind of
standing in the way.
Speaker 4 (20:03):
So I think if you think about challenges that Singapore faces,
they're the challenges that a lot of other countries face.
So an aging population is a challenge. Transition in terms
of digital transformation of economies. You know, that's a challenge.
It creates opportunities, but it also creates threats. Energy transition
(20:25):
is a challenge, and in Singapore's case that we spoke
about drivers of the financial services markets and I spoke
a little bit about how it is an energy trading center. Well,
one of the issues that you face is that if
the world electrifies, electricity is generated locally, and so you
don't need to.
Speaker 3 (20:43):
Be shipping coal or oil or whatever around.
Speaker 4 (20:46):
The world because you know, if you find other ways
to generate electricity. So one of the things that you
have to do, obviously is you have to respond to that.
And in each of these cases, what we're arguing in
our report is that that Singapore seems to have a
solution to these problems. So in terms of energy transition,
we think Singapore is building itself up to be an
(21:07):
L and G hub, for example, which is a transition
fuel and ultimately, if it gets that right and we
get developmentto NAZI and grid, it can become an electricity
trading hub. If you look at longevity, if your population
is aging, then you basically have to put in a
lot of reforms to improve productivity because you have to
make each unit of labor generate more than it did
(21:30):
do in the past. And if you look at a
lot of the work that Singapore is doing, for example,
to try and make it easier for people to exist
here in their old age. So just simple things like
making the infrastructure more accessible to people who are maybe
less physically mobile than they were in the past. Measures
in the housing market to encourage people to leave closer
(21:53):
to their parents so then you have family.
Speaker 3 (21:55):
Support as for population ages.
Speaker 4 (21:58):
So it does face the challenges that everybody else faces.
But the key thing is if you do this it's
right you try and come up with the policy responses
that enable you to mitigate or overcome those challenges.
Speaker 2 (22:11):
The nick just to expand on what Krtia was talking about.
What could go wrong with this poolish case on Singapore,
Like it is becoming much more expensive to run a
business out of the city state. We saw rental prices
really skyrocket during COVID competitively, like on a cost basis,
it must be disadvantaged versus saying Malaysia or Indonesia. If
(22:33):
you were saying to you want to start up a
data center, for example, yeah.
Speaker 4 (22:37):
I mean yes, cost is a challenge you mentioned earlier
on Increased competition is also a challenge. Singapore is not
being left to do this on its own, it's seeing
competition from elsewhere. So definitely those are areas that you
have to think about. We've also highlighted I mean, geopolitics
is more challenging, but it was Singapore really has benefited
(22:59):
from a rules based order, and so if you're a
small city state, it becomes more challenging if that shows
some strainths. So those are the sort of challenges it
faces in terms of costs. One of the things you'll
have seen in the press is the Singapore johor Special
Economic Zone, and that's one of the responses to that
is to try and you know I spoke about data
(23:22):
centers and data influence. You get some of the lower
value added stuff done maybe where land is more available,
and then you focus on some of the things like
data inference rather than just for pure data center in
Singapore where your land constrained and to a certain extent
power constraint as well. So yeah, it faces lots of
(23:44):
there are lots of hurdles and obstacles to overcome, and
so ultimately you're making a bet as to whether or
not the policies to overcome those are are going to
be successful.
Speaker 1 (23:56):
Just so, John was asking a question about rents rising,
and I just wonder what it's like to live in Singapore,
especially because we talk about cities retaining talent. You know,
the demographics are changing globally, I mean more or less
depending on what country or city you're in, but everyone's
fighting for this talent. So I wonder how Singapore is
(24:18):
working to try to get more of that talent to
go there, as opposed to I don't know, like Hong
Kong or New York or wherever. Toronto, you know where
I'm from. You know in Toronto is a global capital
for that as well. So sort of on the ground,
what are some things that the city is doing but
maybe could do better too.
Speaker 4 (24:41):
I mean a lot people move to a city because
there are good jobs and interesting jobs, and that's what
these and people move there. So that's why you're developing
things like financial services up, why you're developing a lot
of new technology industry, because you're trying to get those
attractive jobs into saying and Matt, how's the benefit of
(25:01):
local population as well? I mean, I think ninety percent
of people who work in financial services at Singaporean, so
you know, it creates jobs elsewhere. People come here for education.
There's obviously good set of international schools. There's universities that
are internationally recognized and moving up the rankings. I think
people move here for healthcare. You know, healthcare is very
(25:25):
good here.
Speaker 3 (25:26):
An ease of going about your daily life.
Speaker 4 (25:28):
As I said before, you know, it takes me whatever
twenty five minutes some of us to get into the office.
Speaker 3 (25:33):
Summer bardings so.
Speaker 1 (25:36):
Well, Thank you so much for joining us today.
Speaker 3 (25:38):
You're very welcome.
Speaker 2 (25:39):
Thank you you've been listening to Asycentric from Bloomberg Intelligence.
I'm John Lee in Hong Kong.
Speaker 1 (25:45):
I'm gadjd Me Triva, also in Hong Kong. You can
listen to all our episodes on Spotify, Apple Podcasts, or
wherever you listen. And this episode was produced and edited
by Clara Chen. Thanks so much for joining us
Hosts And Creators
John Lee
Tom Corbett
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