Singapore financial institutions are counting on their advantages in artificial intelligence to retain fund managers amid competition from Hong Kong's tax authorities.
The rivalry between these two Asian financial giants has long been about monopolizing global talent and institutional capital. Currently, the two centers are pursuing different strategies to attract t: Hong Kong will provide tax incentives for fund managers and private equity professionals; Singapore, meanwhile, is focused on facilitating access to cutting-edge artificial intelligence technologies.
"It's all about providing confidence for business. On the tax side, it's important to know how much you have to pay to establish your business on a solid footing. On the AI side, you need to have access to the latest tools," said Kher Sheng Lee, Co-Head of the Asia-Pacific region at the Alternative Investment Management Association (AIMA).
However, in July, AIMA expressed concern that potential tax abolition is prompting senior executives of hedge funds and private investment companies in Singapore to consider moving to Hong Kong.
Is There a Huge Technology Gap Between Singapore and China?
Hong Kong legislators are still considering a bill to introduce tax incentives for fund managers and family offices, while excluding proprietary trading firms. This could mean that firms such as Jane Street, Citadel Securities, and Jump Trading will remain outside the favorable tax incentives.
According to data from the Financial Services and the Treasury Bureau, proprietary trading firms are excluded from tax incentives because they do not meet the def of a fund. However, reports suggest Hong Kong is exploring ways to include some proprietary trading firms, such as Jane Street, in the new tax regime.
Despite potential tax incentives, restrictions on advanced Western AI models remain a hurdle for local investment managers. China's "Great Firewall" blocks access to Western AI giants like OpenAI and Anthropic, and although Hong Kong bypasses mainland China's censorship, American tech companies themselves block access to this region.
For quantitative funds that use sophisticated algorithms for a market-beating approach, access to advanced artificial intelligence can be crucial to maintaining competitiveness. Justin Tan from LEK Consulting says the technology gap between Singapore and China is already prompting Hong Kong's quantitative funds to consider relocating key research and trading operations to Singapore.
"From a technology access perspective, Singapore is considered quite an attractive country," he commented.
Singapore Provides Access to Both Chinese and American AI Technologies
Singapore's relationships with Washington and Beijing allow companies in this city-state to utilize artificial intelligence technologies from both countries, including the latest models from Moonshot and DeepSeek. Ideally, Singapore has repositioned itself as a neutral jurisdiction designed to protect capital from the intensifying technological competition between the U.S. and China.
Kerry Goh, CEO of Kamet Capital, even stated that opening a business in Singapore could give global clients greater confidence that their intellectual property will remain in from restrictions by China and the U.S.
Recently, the major American hedge fund Citadel issued an ultimatum to its Hong Kong-based quantitative research staff: either relocate or leave the company. According to insiders, data security concerns were among the reasons for the decision to move staff responsible for the fund's key intellectual property. Employees were offered a choice of relocating to Singapore or Miami.
Amid the technological lag, Chinese authorities hope to attract international financial professionals back by making changes to the taxation of investment profits and performance fees. Last year, a number of Asian fund managers received performance bonuses exceeding $1 million, with the highest-paid receiving over $50 million. This makes the proposed tax incentive particularly attra.
Commenting on the tax incentives, a spokesperson for the Financial Services and the Treasury Bureau stated: "In particular, this will further attra private investments to the region, while also complementing Hong Kong's development in areas such as digital assets and trading of precious metals and commodities."
The rivalry demonstrates how financial centers are increasingly competing through tax policy and technology. Hong Kong's tax incentives may effectively make working there cheaper and easier, but Singapore's access to advanced AI models, computing infrastructure, and tech talent could make it far more attractive in the long run.
For quantitative funds, AI can help researchers analyze vast datasets, develop trading strategies, and improve risk management. This makes technology access an increasingly important factor in companies' decisions on where to locate their offices.
Thus, the competition extends beyond taxes. Hong Kong has stron ties with mainland China and developed capital markets, while Singapore positions itself as a technologically advanced hub with access to both Western and Chinese AI tools. For investment companies, the balance between lower taxes and better technology may determine which financial center attracts the next wave of talent.
enjHung, Chairman of the Hong Kong Financial Services Development Council, also argued: "Ultimately, Hong Kong needs to create a platform where [you have] knowledge, information, the rule of law, and the ability to bring money in and out. That is our structural advantage—taxation will become a tactical move to attract people."
end-content
