New money inflows to Singapore jump 15.8% to a record S$448b in 2021

SINGAPORE can absorb record inflows of new money, the central bank chief said, allaying concerns of a real estate bubble even as rents and prices surge to unprecedented highs.

The Asian financial hub attracted S$448 billion last year, 15.8 per cent higher than the previous year, the latest data from the Monetary Authority of Singapore (MAS) show.

“When a large sum of money comes into any country, you should be worried about it,” MAS managing director Ravi Menon said in an interview with Bloomberg Television’s Haslinda Amin. One such concern is flowing into the property market driving up prices. Rather than blocking money coming in, the regulator has imposed measures on the real estate sector to prevent overheating. “We’ve got that under control,” he said.

Singapore’s efforts to build an international wealth hub are paying off as the city enjoys a post-Covid resurgence, attracting investors drawn to its stability. Assets managed by local firms soared 16 per cent in 2021 to US$4 trillion, mostly from overseas, exceeding the global growth rate. Investors from US hedge-fund titan Ray Dalio to Indian billionaire Mukesh Ambani are setting up offices to manage their personal wealth.

The housing market has defied a slump reported in other major markets including Australia, Hong Kong and Canada. As prices jumped 8 per cent in the first nine months – including a sizzling 14 per cent from a year ago in the third quarter alone – the government took steps to cool the market. Landlords meanwhile are asking tenants for big rent increases, sometimes as much as double, when they extend leases.

The inflows, which are roughly three quarters of Singapore’s nominal gross domestic product, come on top of gains from higher asset prices last year, according to the central bank. The assets are helping to boost the financial hub as it seeks to add as many as 20,000 finance jobs over five years, in areas including wealth management and sustainable financing.

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Asia flows

Menon said money is coming from growing wealth across Asia, where the rich are seeking a place to invest. He acknowledged that North Asia’s affluent contribute a large portion of asset flows into Singapore.

“They are richer, they have more investible assets,” he said, speaking ahead of Singapore’s FinTech Festival that starts on Wednesday (Nov 2).

In China, Asia’s largest wealth market, assets plummeted following the Communist Party congress, where President Xi Jinping solidified his grip on power.

Asked whether China may see accelerated capital outflows, Menon said it’s too early to tell.

“There’s already some happening,” he said. “Some of it have come to Singapore, you would have seen in the last few years. I am not sure we are looking at any marked pickup.”

The latest Global Financial Centres Index ranks Singapore as Asia’s top financial centre, overtaking Hong Kong which slid to fourth globally.  

Singapore’s capital and financial markets, as well as its banking system, are deep and liquid enough to handle large fund flows, he said. MAS, which also serves as a financial regulator, is strict when it comes to illicit fund flows, repeatedly reminding financial institutions to be on guard, Menon said.

“There’s so much money coming in, you can choose,” he said.

Other interview highlights:

• MAS has been focusing on strengthening disclosure rules by listed companies to deter firms from misconduct
• Singapore is not aiming to become a cashless society even though digital payments are becoming common BLOOMBERG