According to a Goldman Sachs estimate, Hong Kong (HK) may have lost as much as USD 4 billion in deposits to rival financial hub Singapore between June and August.
These outflows coincide with escalating anti-government protests and political unrest in the Chinese city.
Goldman Sachs analysts Gurpreet Singh Sahi and Yingqiang Guo estimated between USD 3 billion and USD 4 billion in Hong Kong dollar deposits had flowed to the city’s rival international financial centre as of the end of August.
“We found modest net outflow from (Hong Kong dollar) deposits in HK and modest net inflow of (foreign exchange) deposits in Singapore. That said, the HK banking system still has ample liquidity in HK$ as well as in foreign currencies,” the analysts said in a research note on Monday.
The Monetary Authority of Singapore said that foreign-currency deposits by non-bank customers rose 52 per cent to a record SGD 12.8 billion (USD 9.63 billion) in August, compared to SGD 8.4 billion a year ago.
Singapore has already felt the effects of the unrest in Hong Kong as mainland Chinese visitors have foregone travel to the former British colony, with several moving their travel during “golden week” to the Lion City.
The decline in mainland tourists has hurt Hong Kong retailers, with sales in August declining for a seventh straight month and marking the sharpest year-on-year decline on record, according to Bank of America Merrill Lynch.
Hong Kong police and protesters clashed on Sunday as tens of thousands marched through the central city wearing face masks in defiance of colonial-era emergency powers. Police fired tear gas and baton-charged protesters in several locations, while some protesters threw bricks and petrol bombs at them.