Hong Kong will remains as Asia Financial Centre

MSCI Inc is moving its derivatives products to Hong Kong from Singapore in Feb 2021.

MSCI Inc announced it will move licensing for derivatives products to Hong Kong from Singapore next year.

Last week, Hong Kong has returned to a state of political turmoil following Beijing's decision to introduce a new security law. The long-term concern for investors is that this is the latest move in a slow erosion of the "one country, two systems" policy, and the beginning of the end for Hong Kong's status as an autonomous territory. That would put a giant question mark over its role as a reliable gateway to the China market. Initially, we believe there will be massive capital flight in the near term as big investors, multinationals and even expatriates begin to move their money out of the territory.

Initially, we thought Singapore would be a major beneficiary from Hong Kong's political instability. However, we are now reversing our view after this news.

Although the conflict between the US and China is still escalating, we believe they will come to a consensus to protect their interest in Hong Kong. There will be a huge change in Hong Kong but one thing for sure, her status as the world's third-largest financial hub will remain unchanged.

The rivalry between Singapore and Hong Kong has been ongoing for decades and Singapore is losing out in the race track of being Asia's trading hub or Asia's IPO center. However, we believe Singapore's status as Asia's wealth management center will remain intact and will grow even stronger when everything settles down.

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