Shortly after Iran’s first missile and drone attacks on Dubai last week, two Indian businessmen based there tried to move more than $100,000 each from their local bank accounts to Singapore to hedge the risk.
Technological glitches after the Iranian attacks initially scuttled those plans, the businessmen, who did not want to be identified because of the sensitivity of the matter, told Reuters.
One of them said he was subsequently able to transfer the amount to his Singapore bank account through another Emirates-based bank.
Scores of other wealthy Asians are inquiring or making similar moves to move their assets parked in Dubai to the regional financial centers of Singapore and Hong Kong, industry advisers and lawyers said, as the U.S.-Israel war against Iran darkens the Gulf’s safe-haven aura and roils investors.
While the wealthy typically diversify their investments across regions and asset classes, they choose where to base based on tax, regulatory, privacy and operational considerations.
To this end, Dubai has emerged in recent years as the preferred wealth center for businessmen and wealthy families in Asia, especially from China, as they seek to take advantage of its favorable policies.
Read also | Middle East conflict: Bahrain says Iranian missile hits oil refinery
In addition, the Gulf region has also become an investment destination thanks to the boom in real estate and infrastructure. The total assets of the United Arab Emirates (UAE) banking and financial sector exceeded 5.42 trillion dirhams ($1.48 trillion), according to its central bank.
This trend is now under sharp scrutiny as the attacks on Dubai and Abu Dhabi have challenged the UAE’s reputation for stability.
Singaporean private lawyer Ryan Lin said six or seven of his 20 Dubai-based clients, each holding an average of $50 million in assets, had contacted him this week, with three planning immediate asset transfers to the city-state.
One client is “checking how quickly they can move everything to Singapore,” Lin said.
Iris Xu, director of global corporate and fund services provider Anderson Global, said 10 to 20 family offices had asked her firm this week about moving assets back to Singapore from the Middle East amid fears the conflict could drag on.
Family offices are complex firms that manage the portfolios of the wealthy.
“Dubai has always been about tax benefits, but now I think tax benefits may not be a top priority for it,” she said.
Read also | JMIC data shows an “almost complete pause in traffic” through the Strait of Hormuz
A wealth management adviser in Singapore, who did not want to be identified because he was not authorized to speak to the media, said he had spoken to 13 UAE-based clients so far, with more than half serious about moving assets to Singapore.
“Flying back and forth will be a challenge even if the conflict ends tomorrow. It’s a matter of trust,” the adviser said.
Grace Tang, chief executive of Phillip Private Equity, said her mostly Asian clients are shy, with 10 to 20 inquiring about moving their assets to Singapore and trying to preserve their capital.
However, not all asset managers see the ongoing conflict in the Middle East as prompting immediate capital flight.
Dhruba Jyoti Sengupta, chief executive of Dubai-based WRISE Private Middle East, a wealth management group, said the firm had not seen “serious discussions of capital flight” because clients were confident of the UAE’s long-term resilience.
“They are sophisticated global investors, already internationally diversified but deeply invested … in the UAE’s growth story,” he said. “Despite the wider geopolitical turbulence in the region, clients feel safe.”
The UAE’s banking and financial sector was resilient, strong, stable and well-positioned to navigate regional developments, its central bank governor Khaled Mohamed Balama said on Thursday, adding that banks, financial firms and insurance companies were operating normally and without interruption.
Leading Singapore-based asset managers Bank of Singapore and DBS Group said their clients are closely monitoring developments in the region and are taking a wait-and-see approach for now.
As the UAE struggled to maintain its safe haven status, some continued with their expansion plans in the Emirates.
Jeremy Lim, co-founder of GrandWay Family Office, is in the process of opening a family office in Abu Dhabi and said his plans have not changed – as long as the UAE does not get directly involved in the conflict and prevent any further escalation by Iran.
“The real coup for businesses would be for the UAE to directly engage in a conflict with one side,” Lim said.
Disclaimer: This story was published from the agency’s news feed without editing the text. Only the title was changed.
