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Why Hong Kong behind Singapore?

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  1. #1

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    Why Hong Kong behind Singapore?

    Hey, does anyone know why Singapore has managed to gain such a large advantage over Hong Kong in the foreign exchange (FOREX) financial sector although our geographical set-up is very much similar?


  2. #2

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    Could you elaborate on what this "large advantage" is that Singapore has, and how it is manifested?


  3. #3

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    Quote Originally Posted by PDLM
    Could you elaborate on what this "large advantage" is that Singapore has, and how it is manifested?
    For one, the total FX turnover/GDP for Singapore is much larger than that for Hong Kong. I guess the question is how is it that Singapore is able to garner such a large portion of the FX market although our geographical layout if very much similar?

  4. #4

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    So why is having a large Forex/GDP ratio an "advantage"?


  5. #5

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    Quote Originally Posted by PDLM
    So why is having a large Forex/GDP ratio an "advantage"?
    I'm not saying that having a large ratio is an advantage. If Singapore is able to have a large portion of its GDP contributed by forex, wouldn't this mean that it has an advantage in forex?

  6. #6

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    Quote Originally Posted by PDLM
    So why is having a large Forex/GDP ratio an "advantage"?
    Presumably for the fees it generates which contribute to the overall economy in the same way income from other services do. I have no idea what the motivation of wushimushi in posting this is, but even very small commission/spreads become quite large numbers when you multiply when by trillions of dollars traded.

  7. #7

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    I think that there has to be another factor other than fees considering the difference is quite stark. I was thinking more along the lines of differences in government regulations that account for the difference. Hong Kong's stand is arguably a lot more relaxed compared to Singapore where there are strict regulations for the simplest financial transactions. Following the argument of the difference being due to volume rather than fees, I would like to learn more about how Hong Kong's laissez faire policy impacting this sector.


  8. #8

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    I think you might also find that Singapore's role as an oil trading hub also contributes to big forex transactions at the same time. there is a LOT of money flowing around the world in oil.


  9. #9

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    Quote Originally Posted by wushimushi
    I think that there has to be another factor other than fees considering the difference is quite stark. I was thinking more along the lines of differences in government regulations that account for the difference. Hong Kong's stand is arguably a lot more relaxed compared to Singapore where there are strict regulations for the simplest financial transactions. Following the argument of the difference being due to volume rather than fees, I would like to learn more about how Hong Kong's laissez faire policy impacting this sector.
    Singapore is essentially the largest port & trading hub in the region, as well as a hub for OTC commodities. It's natural that the FX market will flourish there, as you need a robust FX market to finance trade. Ofcourse, once you have a robust market, speculators are bound to follow, and that's what leads to the high turnover.

    I'm not too sure why government regulation comes into the picture. In fact, stricter government controls are probably beneficial so that you have measures in place for counterparty defaults etc. I'm sure regulations are quite lax in Somalia, but you don't see them have a booming FX market.

    I think you're looking at it from a speculators point of view, try and understand the fundamentals of the FX market and you could probably see why Singapore ranks fairly high in FX turnover.

    I don't see why having a high Forex/GDP ratio matters at all. At the most it gives you an indirect indication of the trade sector, but even that is skewed as the majority of volumes are speculative.

  10. #10

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    The answer is simple. The government of Singapore is concerned with Singapore and the well being of its citizens, while the government of Hong Kong is concerned with the mainland's growth and welfare and will enact any policies that are beneficial to the mainland before they consider the effect on Hong Kong. That is to say, Hong Kong exists to serve the motherland now. Singapore has no motherland. They have no industries they want to let go to Malaysia (across the boarder), and will foster policies that encourage industries such as high tech to remain in Singapore, and not help them move to lower cost countries.

    JaredHK likes this.

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