Singapore markets close in 3 hours 35 minutes

MAS chief says trade conflicts bad for confidence, may affect investment

Ravi Menon, managing director of the Monetary Authority of Singapore, in 2016. (File photo: Reuters/Edgar Su)

If the US-China trade conflict persists, “the more serious casualty is perhaps not trade but investment,” Monetary Authority of Singapore (MAS) managing director Ravi Menon said at a speech in Chongqing, China on Friday (2 November).

“Trade conflicts are bad for confidence, and businesses around the world may scale back investment amidst uncertainty,” Menon said in a speech at the inaugural Singapore-China (Chongqing) Financial Summit. “A decline in investment will reduce productive capacity, delay technological upgrading, and compromise productivity growth,” he said.

The MAS chief said the effects of the trade tariffs will likely become discernible going into the next year, especially if the coverage of these tariffs is expanded. Still, the longer-term effects aren’t expected to be large, as supply chains reconfigure and production networks adjust, he said.

Ten memoranda of understanding were signed at the summit, which is part of the Chongqing Connectivity Initiative (CCI), a joint project started three years ago.

The agreements include the Singapore FinTech Association forming an alliance with the Chongqing authorities to develop the municipality’s fintech industry. In addition, OCBC Bank, Xiaomi and Hanhua Financial Holding Co will explore fintech collaboration in the areas of retail and institutional financial services in China. Lu International, part of the Ping An Group, and other Singapore institutional investors will collaborate with Chongqing Financial Assets Exchange to help microfinance companies issue debt overseas.

As of August, 51 CCI-qualifying cross-border deals worth US$4.2 billion (S$5.8 billion) have been completed, Menon said. Raising capital in Singapore has allowed Chinese companies to diversify their investor base and take advantage of the S$3.3 trillion pool of assets under management. Bond issuance by Chinese companies almost doubled in 2017 to S$18 billion, with more than a quarter of the amount by first-time Chinese issuers in Singapore.

Related stories:

Singapore, China to boost capital markets cooperation

Singapore to cooperate with China on regional infrastructure projects

China’s Belt and Road tempts states, but comes with risks