Competing to Be Asia's No. 2 Hong Kong and Rival Singapore Adjust Better Than Others to Asia Economic Crisis

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Lily Tan thought the pace of life in Singapore was pretty fast. But that was before she went abroad to work in the finance industry. First she stopped in Tokyo, Asia's undisputed financial hub. But then she moved to a city that claims the title of being No. 2 - Hong Kong.

After nine years living and working in the former British colony, Ms. Tan now says her hometown of Singapore probably has a way to go to supplant Hong Kong as a finance center. She finds the pace of life in Singapore to be, well, more leisurely than in Hong Kong. "Even the subway moves slower," she says.

Hong Kong and Singapore have long been rivals. But the region's economic crisis has ratcheted up the historic competition between these Asian city-states. Both have prospered because of the energies and talents of their hardworking residents, not because of any natural riches. Both are overwhelmingly Chinese. But being former British colonies, they are English-friendly and have attracted an important segment of expatriate professionals. Each has carved out its own special niche in the financial markets. Singapore surpasses Hong Kong in foreign-currency trading, with a daily turnover of about $100 billion. But Hong Kong bests Singapore in the number of investment funds. Says a Hong Kong investment banker, "Singapore is still very much a regional financial center, while Hong Kong is a junior partner to New York, Tokyo, and London ... and if Tokyo doesn't do something about its financial system, Hong Kong may not be a junior partner much longer." The current financial turmoil in Asia has hit both cities, but not nearly as hard as elsewhere in the region. In part, that is because both have a reputation for highly professional, incorruptible banking authorities. Moody's Investor's Services ranks three Singaporean banks as the strongest in Asia. Another reason is that they both have learned hard lessons in the past. Hong Kong's stock exchange ignominiously suspended trading for four days in the wake of the October 1987 stock-market crash. Experts from the Bank of England were brought in to help restore confidence. Singapore was embarrassed when a young securities trader named Nick Leeson managed to bankrupt the venerable British Barings Securities in 1995 by running up nearly a billion dollars worth of debts by trading in derivatives. …