Deutsche Bank’s incoming Asia-Pacific CEO, Alexander von zur Muehlen, is set to begin his term today from Singapore rather than the position’s historical base of Hong Kong.
The geographic shift has mirrored the recent trajectory of foreign capital, as several alarming developments—including Beijing’s controversial national security law and Washington’s cessation of preferential economic treatment—have stimulated capital flight from Hong Kong to Singapore.
Companies deemed threatening to China’s national security will now be indictable under the new legislative framework; mainland Chinese social media users have even launched attacks against territorial firms, such as HSBC and Suncity Group, over alleged ties to China’s geopolitical adversaries. The associated risk has damaged the already bleak trajectory of foreign direct investment (FDI) in Hong Kong, which had slipped 47% in 2019.
Expect the technology sector to be the first to feel the ripple effects of capital flight, as multiple giants—including Facebook, Google, Twitter and TikTok—have terminated select operations within Hong Kong in response to the increasingly hostile corporate climate. While Singapore has downplayed the magnitude of the outflows, China’s continued erosion of Hong Kong’s market attractiveness could spark a more permanent regional shift. Despite Deutsche Bank’s official maintenance of a “dual hub” structure, its deliberate decision to base operations in Singapore signals a serious blow to Hong Kong’s credibility as an international financial centre.
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Daniel is an analyst and editor on the Current Developments team. He contributes regularly to the Daily Brief, focusing primarily on European, Middle Eastern and sub-Saharan politics.