Singapore and Hong Kong are engaged in a significant contest to attract financial talent and bolster their asset management industries, both of which are valued at over $5 trillion. This competition intensified recently with Hong Kong's move to slash taxes on carried interest, prompting Singapore to introduce its own comprehensive package of incentives. These include exempting a share of profits for fund managers and investment professionals who deliver strong returns, launching a new hedge fund investment program, and loosening income requirements for its Overseas Networks & Expertise Pass visa program to better accommodate compensation structures driven by bonuses. These measures are designed to retain and attract top-tier professionals, particularly in light of Hong Kong's previously more attractive personal income tax rates and retrospective tax breaks.
Singapore's recent proposals, announced by the Monetary Authority of Singapore (MAS) on August 19th, are seen as crucial in signaling its ambition to be the region's leading asset management hub. The initiatives, which are awaiting full details until Budget 2027, include a tax exemption for profit-related returns and a new foreign work pass track. This move follows Hong Kong's proactive steps, such as gazetting a bill to expand tax breaks for private funds and carried interest, which had reportedly led some Singapore-based fund managers to consider relocating staff to Hong Kong. While Hong Kong's assets under management grew by 20% to reach HK$42.2 trillion (approximately $6.8 trillion) in 2025, Singapore's AUM reached $6.7 trillion, up around 10% year-on-year.
Industry experts note that while both cities already have low tax rates, these further cuts and incentives are critical for attracting and retaining talent. Singapore's new visa channel for its ONE Pass, which relaxes salary requirements to include various forms of income beyond a base salary of S$30,000 per month, is particularly appealing to senior executives whose compensation is heavily reliant on performance-related bonuses. However, some analysts point out that these measures primarily target senior professionals and may not adequately address the challenges firms face in hiring younger talent, potentially creating a gap in the talent pipeline. The effectiveness of these measures will also depend on their specific details, such as whether tax exemptions apply to individual pods within multi-strategy firms.
The competition is not a "zero-sum game" according to Chee Hong Tat, Singapore's minister for national development and deputy chairman of MAS, suggesting there's room for both markets to grow. However, the timing and scope of these incentives are crucial. For instance, Hong Kong's decision to apply its tax breaks retrospectively to cover 2025/26 could be a deciding factor for some, as Singapore's measures will only take effect from the 2027 tax assessment year. Ultimately, while fundamental factors like the rule of law and proximity to clients are well-established, these marginal policy adjustments in tax and visas are designed to tip the balance for fund managers who perceive little difference between the two financial centers.
