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SINGAPORE – Singapore is attracting wealthy investors and family offices moving their money out of the troubled Middle East<\/span><\/a> in search of a safe haven.<\/p>\n March financial data released by the Monetary Authority of Singapore (MAS) – the first month available since the Gulf war erupted on <\/span><\/a>February 28<\/span><\/a> – confirmed anecdotal reports that the rich were moving their assets to Singapore, and to a lesser extent, Hong Kong, after the war.<\/p>\n Looking at the data, Maybank\u2019s economists Dr Chua Hak Bin and Mr Brian Lee said these flows are reflected in an outsized jump in March for Singapore deposits, foreign currency deposits, deposits by non-residents, MAS foreign reserves, and gold imports from Dubai.<\/p>\n Total deposits rose by $66.2 billion, or 7.2 per cent year on year, to $2.1 trillion in March, accelerating from a 4.8 per cent increase in February, MAS data showed.<\/p>\n The rise was driven by a 7.8 per cent increase in Singapore dollar deposits and a 6.7 per cent gain in foreign currency deposits, the economists told ST.<\/p>\n A significant portion of the surge was driven by non-resident deposits, which jumped 5.3 per cent from February to March, increasing by $33.2 billion to reach $659.1 billion.<\/p>\n On a year-on-year basis, non-resident deposits grew 4.6 per cent. There is no available breakdown by nationalities.\u00a0<\/p>\n The inflows have also fed into official reserves, which rose by $15.5 billion in March and a further $2.4 billion in April, signalling continued capital entering the financial system.<\/p>\n At the same time, gold flows offer another indication of safe-haven demand.\u00a0<\/p>\n Singapore\u2019s gold imports from the UAE surged to a five-year high of 1,446kg, worth US$220 million, in March.<\/p>\n Dealers said high-net-worth investors with bullion stored in the UAE have grown concerned about insurance coverage and the ability to move assets quickly if airspace is disrupted.<\/p>\n The influx of capital is already affecting domestic financial conditions.<\/p>\n Increased liquidity has helped cap interest rates, with the three-month Singapore Overnight Rate Average or SORA – a benchmark for mortgages – falling to 1.07 per cent, down about 12 basis points since the start of the year despite no rate cuts by the US Federal Reserve.\u00a0<\/p>\n Maybank expects the benchmark rate to decline further to 0.85 per cent by year-end if inflows persist.<\/p>\n A lower SORA typically means cheaper borrowing costs for homeowners with loans pegged to floating rates, especially if they have just refinanced or are due for repricing soon. They should see lower monthly mortgage instalments.<\/p>\n Homeowners on fixed-rate packages would not benefit immediately, but they may consider refinancing later if floating rates become more attractive.<\/p>\n The Singapore dollar has also strengthened, appreciating about 1.1 per cent against the US dollar since the start of the year.<\/p>\n The economists expect the currency to trade towards the stronger end of the Singapore dollar nominal effective exchange rate (S$NEER) policy band as inflows continue.<\/p>\n The S$NEER is an index of the Singapore dollar\u2019s trade-weighted exchange rate against the currencies of the Republic\u2019s major trading partners.\u00a0\u00a0<\/p>\n \u201cSingapore is emerging as a major beneficiary from this capital flight. Singapore\u2019s safe haven status is anchored by its AAA sovereign rating, rule-of-law framework, politically neutral foreign policy and stable exchange rate regime,\u201d the Maybank economists said.\u00a0<\/p>\n Regionally, Malaysia recorded modest increases in both ringgit and foreign currency deposits in March, while Hong Kong showed no clear above-trend rise despite reports it may also be benefiting from safe-haven flows, the economists said.<\/p>\n The shift in capital follows a sharp deterioration in investor confidence after the outbreak of the US-Iran war on Feb 28.\u00a0<\/p>\n