Hong Kong withstands protests with only a trickle of ‘fright capital’ fleeing to Singapore, MUFG Bank estimates
- Hong Kong may have suffered US$6 billion in fright capital to Singapore ‘at most’ from May to October as protests intensified, MUFG estimates
- Scale of outflows not large enough to warrant serious concern yet, though further leakage cannot be ruled out if violence persists
Hong Kong’s financial system is withstanding the city’s worst political crisis, with only a trickle of deposits fleeing to rival financial hubs like Singapore even as months of street protests have driven the economy into a recession.
At most, US$6 billion of “fright capital” may have left for Singapore between May and October as anti-government protests intensified, MUFG Bank, a unit of Japan’s biggest financial services group, said in a December 12 report.
The amount is estimated from a corresponding surge in foreign-currency deposits of S$8.4 billion (US$6.2 billion) in the Southeast Asian nation’s banking system in the period, the bank said.
The amount represents about 0.34 per cent of HK$13.73 trillion deposits in the local banking system at the end of October, according to data published by the Hong Kong Monetary Authority, suggesting the size of capital leakage stoked by social unrest is not worrisome.
“Our assessment remains that the scale of outflows to date has yet to be large enough to warrant serious concern,” Cliff Tan, East Asian head of global markets research, said in the report. “We believe the unfortunate violence of November 2019 will further push more capital out of Hong Kong.”