Hong Kong vs Singapore: Inside the Tax Battle Reshaping Asia's Hedge Fund Industry

A concrete example is the relocation of FengHe Fund Management. The Singapore-based hedge fund, which manages approximately $9 billion in assets, announced in March 2026 that it will open a Hong Kong office in the second half of the year, securing office space at Two International Finance Centre in Central and applying for an asset management license . CEO Kwek Hyen Yong said the move was intended to provide flexibility to team members and access Hong Kong's talent pool .

Industry sources told the Financial Times that investment professionals in Singapore are worried Hong Kong's tax changes could trigger "a flood of departures" .

But the shift is not one-directional. Citadel, the $67 billion US hedge fund, told some of its quantitative researchers based in Hong Kong to relocate or leave as part of a global restructuring, with some moving to Singapore or Miami . This adds nuance — while Hong Kong is gaining Singapore-based firms, it is also losing some high-value quant roles. However, the broader momentum at scale appears to be flowing toward Hong Kong.

How Each City Is Responding: A Policy Battle Heats Up

Both cities are now locked in what the Australian Financial Review calls a "tax cut battle" .

Hong Kong (on the offensive)

• Going for zero on carried interest: Proposing widespread tax exemptions for carried interest across hedge funds, private equity, and family offices, with some industry reports citing a 0% rate on qualifying income .
• Exempting performance-linked bonuses from salaries tax: A proposed law change, to be submitted to the Legislative Council, would exempt performance-linked bonuses from salaries tax for qualifying fund managers . If passed, this would make Hong Kong the first major Asian financial center to grant such relief.
• Enhancing family-office incentives: Tax exemptions on qualifying transactions for family offices and family-operated investment vehicles, including on gold and cryptocurrencies, are also being introduced .

Singapore (on the defensive)

• MAS engages firms on potential cuts: The Monetary Authority of Singapore (MAS) has held talks with investment firms about reducing taxes on fund managers to maintain competitiveness and retain talent .
• Considering corporate tax cuts: Potential directions include lowering the standard corporate tax rate of 17% for investment firms to around 10% on certain fund management income .
• Exploring easier talent entry: Singapore is also considering making it easier for hedge funds and asset managers to hire foreign talent .
• No final decisions yet: All proposals remain under internal government review, with no official announcements .

The Broader Context

This policy battle is playing out against a backdrop of significant growth in Asia's hedge fund industry overall. Hedge fund launches are being prepped at a rate not seen since before Covid, and competition among financial centers to offer early-stage capital and tax breaks is intense . Hong Kong's Deputy Financial Secretary Michael Wong reported a 24% increase in hedge fund managers, private equity managers, and family offices in the city over the past three years .

Both Hong Kong and Singapore offer a similar set of advantages — strong infrastructure, stable legal systems, deep talent pools — so the decisive factor in this new phase of competition comes down to tax policy. Hong Kong has made the first major move by targeting individual compensation directly. Singapore's response is still in development, but the fact that its central bank is holding urgent talks with firms signals the seriousness of the threat. The winner of this battle will shape where the next generation of Asia's most lucrative funds and managers choose to call home.