Singapore taps JPMorgan, UBS to push regional gold hub ambition

[SINGAPORE] Singapore is cranking up efforts to turn itself into a regional gold hub, tapping local and international banks, including JPMorgan Chase and UBS Group, to help boost liquidity and make the most of demand from wealthy investors.

The Monetary Authority of Singapore (MAS) has had meetings with lenders over recent months to assess the potential of the city-state as a physical trading hub, according to sources familiar with the matter. They asked not to be named as the plan is not yet public.

UBS and JPMorgan are two of the world’s largest market makers for bullion. ICBC Standard Bank, a clearing bank for the London gold market, is also involved, together with DBS Group Holdings, UOB, and OCBC, the sources said.

Gold has seen a historic bull run over the last year, smashing through records as investors look for alternatives to fiat currencies and for a safe haven in times of geopolitical and trade turmoil. Hong Kong, which has long competed with Singapore to attract liquidity and high net worth investors, is already positioning itself as a leading bullion centre, supported by Beijing’s own ambitions to take a bigger role in the global financial system.

DBS, UOB and OCBC confirmed they have been working with the MAS to support the growth of a Singapore gold market. DBS said that it saw a larger role for Singapore “as a trusted centre for gold flows in the region”.

“There is strong and growing demand across Asia where investors are increasingly viewing gold as a safe-haven asset amid geopolitical uncertainty,” said Kelvin Ng, head of group global markets at UOB. “This is reinforced by robust South-east Asian growth and rising investment flows into gold bars, coins, and other gold-backed products.”

Singapore’s ambition to become a trading and storage hub, supported by government agencies beyond its central bank, is focused on institutional participants, including central banks and family offices, the sources said. All plans are still at an early stage and may change, they added.

“Since last year, MAS has been actively working with key gold market participants to look at ways to support the growth of the gold market in Singapore,” said a spokesperson for MAS. “We will share more on key initiatives in due course.”

JPMorgan and UBS declined to comment. An ICBC Standard Bank executive also declined to comment.

SEE ALSO

MAS weighs Middle East conflict impact on Singapore, says forex, money markets ‘continue to function normally’

The Singapore Exchange is also assessing industry demand for a new gold contract, according to sources familiar with the matter. The bourse suspended its Kilobar Gold Contract in 2018 due to sluggish trading, only four years after its debut. The government abolished a goods and services tax on investment-grade precious metals that also include silver in 2012, but that has not spurred a trading boom.

SGX and the Singapore Bullion Market Association, a trade association for local lenders and companies, did not reply to Bloomberg requests for comment.

UOB is the only Singaporean lender offering physical gold sales and vault services to retail customers. OCBC, meanwhile, has said that it is exploring a custody business for institutional and wealthy clients’ physical gold. BLOOMBERG