The following is an excerpt from Asian Private Banker’s Bottom Line newsletter – an essential rundown of all of the past week’s essential news and views on the region’s private banking industry. Bottom Line is available to all APB subscribers

One of the more curious telltale signs of the swathes of Chinese wealth that has flowed into Singapore over the last year or so can be seen on its streets. The pink Rolls-Royces and baby-blue Bentleys have become a source of mirth among private bankers and Singapore Inc more broadly, but they underscore the city-state’s rising status as a wealth hub post-COVID-19.

But a more important metric in this regard is AUM across Singapore’s local private banks. Take DBS, for example, whose AUM rose by 4% to US$162 billion during 2022, according to APB Insight data. The lender has benefited from a confluence of factors, including higher interest rates to soak up deposits, an improving platform, and disruption elsewhere in the private banking industry. When private wealth flows into Singapore from elsewhere, people familiar with matter told Asian Private Banker, its first stop is usually DBS.

How long will Singapore’s wealth boom last? The government has already expressed some discomfort with the distorting effects it can have, notably soaring prices in everything from villas on Sentosa Island to supermarket goods. Taxi drivers, always a reliable barometer for public sentiment, frequently complain of cashed-up new arrivals from mainland China. But senior figures in the private banking industry believe that moves to take some of the froth out of the market, such as hiking stamp duty on property purchases by foreign buyers to 60%, will only have an impact at the margins.

But that also poses a bigger question. Once wealth finds its way into Singapore, what does it do next? Lacking Hong Kong’s deep capital markets and blockbuster initial public offerings (IPOs), conversations around investments invariably focus on the moribund local stock market, luxury property, funds, and venture capital focused on local start-ups.

Given that, do not count out Hong Kong. The missing piece for the city, which has recently removed its COVID-19 curbs and unveiled its own family office sweeteners, is a rebound in local and Chinese markets. If and when that happens, expect to see more pink Rolls-Royces on its own streets.