SIGNS continue to mount that Singapore stands to be a beneficiary from Hong Kong's protracted woes, but such a narrow view obscures the likelihood that the Republic - and even the entire region - will not go unscathed if the situation worsens.
Despite how their relationship is often described in competitive terms, the two Asian financial centres are inevitably intertwined as a result of trade linkages and other ties that affect the fortunes of the region.
Hong Kong is Singapore's fifth largest trading partner, as well as Singapore's fourth largest investment destination. As of end-2017, Singapore's cumulative foreign direct investment (FDI) into Hong Kong was S$57.4 billion, while Hong Kong's cumulative FDI into Singapore was S$61.0 billion as of end-2018.
As both are small, open economies, they are heavily affected by the external environment, with their trade three times that of their gross domestic product. Both markets - to varying extents - also depend on the state of China's economy.
CIMB Private Bank economist Song Seng Wun quipped: "We are all linked - we sink or swim together."
As it is, the unrest in Hong Kong, which started in earnest in June with protesters taking to the streets over what they view as increasing interference by Beijing, have brought the city to its knees. Hong Kong has entered into a recession this year, with tourism numbers and consumer spending plummeting with no resolution in sight. On the surface, it appears that Singapore experienced some gains from Hong Kong's pain: the Republic has seen "small" inflows of capital from Hong Kong, greater property investments from investors on the prowl for a safe haven, and increased Chinese visitor arrivals as they avoid Hong Kong due to the protests.
Goldman Sachs estimated that some US$4 billion of deposits have moved from Hong Kong to Singapore from April to August - but economists point out that it is almost a drop in the ocean when compared with Hong Kong's estimated US$1.7 trillion in total deposits.
The figures correspond with foreign currency deposits in Singapore; they have shot up considerably since June. It rose from S$7.77 billion in June to S$11.18 billion in July to S$12.78 billion in August. It rose again to S$14.9 billion in September. Foreign currency deposits have mostly stayed within the S$7-8 billion range in the past three years.
To be clear, foreign currency deposits can come from both residents and non-residents, and the latter can come from multiple countries. CIMB Private Bank economist Song Seng Wun noted: "The jump in the growth in foreign currency deposits seems to coincide with the start of the Hong Kong unrest and the worsening of law and order there."
But that being said, he added that this phenomenon is nothing new for Singapore due to its reputation as a safe haven.
"The spotlight now is on Hong Kong, but whenever there are periods of political uncertainty in the region, we do see capital flows into Singapore," he said.
"It is inevitable - when there's uncertainty and people are worried - that they have a bit of an 'insurance policy' elsewhere."
When queried, the Monetary Authority of Singapore (MAS) reiterated its stance that the inflows from Hong Kong have not been significant or substantial. A deterioriation of the situation in Hong Kong resulting in large capital outflows "will not be positive" for Singapore and the region, added the spokesperson.
Businesses in Singapore have significant operations in Hong Kong, ranging from corporates such as DBS, OCBC Bank and BreadTalk Group, to small and medium-sized enterprises (SMEs) such as dating agency Lunch Actually and fashion brand Love, Bonito. The situation in Hong Kong has hit some of them hard, especially those in the retail sectors. At the end of 2018, Singapore companies had established 47 regional headquarters, 103 regional offices and 296 local offices in Hong Kong, according to an annual report by the Hong Kong Census and Statistics Department.
So far, most businesses, investors and expatriate talent are still taking a wait and see approach with increased enquiries on options outside of Hong Kong. There have been little actual movements as of yet.
Shaun Poh, executive director, capital markets, Cushman & Wakefield noted: "We are seeing heightened interest from Hong Kong investors looking for opportunities in commercial real estate but they have remained mostly on the sidelines with no firm deals inked."
There has also not been any strong evidence in terms of data to suggest a sharp inflow of Hong Kong money into Singapore residential properties, but there has been a surge in Chinese interest, particularly in luxury homes.
In the first nine months of 2019, about 315 private condominium units in the prime core central region were bought by foreigners - out of which only 8 units were bought by Hong Kong buyers, while 97 units, or 31 per cent, were bought by China nationals, which made up the largest foreigner buyer group in Singapore.
Even as analysts speculate that the increase in luxury home sales could be driven by China buyers looking for an alternative to Hong Kong, other possible reasons that explain this include China's wealthy seeking to avoid new tax rules back home or shifting funds in response to the devaluation of the yuan.
While much of the emphasis has been on investment flows so far, talent flows should also be watched.
"Individuals who decide to move out of Hong Kong have been a very small percentage," said Sharmini Wainwright, senior managing director, Michael Page Hong Kong. "There's definite consideration being given, typically by those with families, but most decide to stay on - very few have gone through with relocation."
These people usually return to their home markets or depart for a host of markets around the world, not necessarily Singapore, she noted.
But should Hong Kong's woes continue to escalate, things might change. As it is, recruitment specialists say that overseas candidates now need more coaxing to make a move to Hong Kong due to the uncertain political climate, and are eyeing other markets such as Singapore.
Lee Quane, regional director - Asia, of mobility consultancy ECA International, said: "If the protests continue to be disruptive, we may well see employees decide that the adverse impact on their families mean that they would be better off elsewhere and Singapore would likely benefit."
This comes as expats that still want to remain in the region will most likely look at Singapore first and foremost before considering other locations such as Shanghai or Tokyo, he added.
So is Hong Kong's loss Singapore's gain? Only if you think about it in terms of a zero-sum game. As mentioned, the two cities are often depicted as rivals in the region, but they are strongly interlinked with significant ties spanning trade, business and financial services. What affects one will affect the other.
A spokesperson from the Ministry of Trade and Industry said: "A peaceful and stable Hong Kong is good for the region, and also for Singapore, as there are many areas where both sides can work together to advance economic development in the region."
The Singapore government has consistently downplayed any possible gains from the Hong Kong situation - for good reason. Firstly, there is nothing to achieve from boasting in the pain of others. Secondly, seeing the situation in binary terms loses sight of the bigger picture.
As Prime Minister Lee Hsien Loong rightly pointed out in October at the Forbes Global CEO Conference: "We thrive best in Singapore when the region is stable, when other countries are prospering and we can do business with them."
Singapore might get a bigger share of the pie for now, but this is a Pyrrhic victory if the pie continually shrinks. If the unrest in Hong Kong continues, it becomes a lose-lose situation in the long term as the region loses its vibrancy.