Rising Sun Over Bullion: Japanese Interest Soars in Singapore’s Precious Metals Market
Thu Sep 26 2024
The landscape of precious metals trading is undergoing a significant transformation. While Hong Kong has long been a dominant force in the Asian market, a recent trend is shaking things up: a surge of Japanese interest in Singapore’s bullion market. Fuelled by a confluence of factors, from Singapore’s strategic location to its robust regulatory framework, Japanese companies in the precious metals industry are increasingly viewing the city-state as a prime destination for expansion. To understand the driving forces behind this shift, we spoke to Bruce Ikemizu, chief director of the Japan Bullion Market Association (JBMA).
The recent Asian Precious Metals Conference (APPMC) in Singapore witnessed a record number of Japanese delegates, highlighting a growing interest in the city-state’s bullion market. Ikemizu attributed this rise to several factors, including his own two-decade long commitment to promoting the event to Japanese audiences through media appearances and direct outreach.
“Geographically, Singapore’s location is ideal,” explained Ikemizu, emphasising the city-state’s central position connecting Japan to Southeast Asia, the Indian subcontinent, and the Middle East. “For many Japanese traders, APPMC offers a unique opportunity for direct contact with players in these regions, bypassing the traditional route through Hong Kong.”
This shift in focus reflects a broader trend: the growing importance of Singapore as a bullion hub.
From Hong Kong’s Decline to Singapore’s Rise
“Hong Kong’s decline as a major Asian centre is undeniable,” said the JBMA’s chief director. Many Western financial institutions have relocated to Singapore, seeking a stable and well-regulated environment. The Singapore Bullion Market Association (SBMA) is actively developing the market with strong government support, creating a stark contrast to the stagnation in the Japanese market over the past few decades.
“The Japanese market matured and thrived in the 1990s and early 2000s,” explained Ikemizu. “Unfortunately, the economic slowdown impacted the market significantly. JBMA is actively working to revive the Japanese precious metals industry, and Singapore’s emergence as a leading bullion hub presents exciting opportunities.”
Japanese interest is driven by several factors beyond just Singapore’s geographical advantage, according to Ikemizu. Singapore’s regulatory framework, market stability, and the abundance of business opportunities are all seen as significant advantages. The SBMA’s efficient organization, compared to Japan’s more relationship-driven approach, was also highlighted.
“Attending APPMC allows companies to connect with all the key players in Singapore under one roof,” he explained. “This streamlined approach is a crucial first step for establishing a presence in the region and building relationships with potential partners.”
Membership Benefits and Future Collaboration
SBMA membership offers a clear path forward for Japanese companies seeking entry into the Singapore market. “For Japanese smelters and refiners with London Good Delivery status,” Ikemizu said, “becoming an SBMA member is the most effective way to promote their brands and secure a foothold in the region.”
The spokesperson also highlighted the growing importance of Singapore for banks and trading houses, as the city-state transforms into a key physical and interbank trading hub in Asia.
Looking ahead, both JBMA and SBMA see potential for further collaboration to facilitate Japanese participation. “JBMA is eager to connect Japanese bullion traders, exchanges, and other stakeholders with the Singapore market,” he said, emphasising a shared goal of developing Asia’s precious metals industry.
Potential collaborative efforts include a Japan-focused roundtable session at APPMC, bringing together various stakeholders from the Japanese market, such as exchanges, trading houses, smelters, recyclers, jewelry manufacturers, and ETF organisers. This would allow for a deeper exchange of knowledge and create a platform for exploring new business opportunities.
Challenges and a Golden Opportunity
The influx of Japanese companies also presents challenges. New entrants may face difficulties navigating unfamiliar regulations, establishing a local presence, and building relationships within the Singapore market.
One interesting aspect to consider is Japan’s gold exports. While acknowledging the lack of recent data, Ikemizu pointed to statistics from 2020, indicating that Japan produced 106 tonnes of gold bars, with 63 tonnes exported. The rising price of gold in yen has created a disincentive for domestic consumption, potentially leading to increased exports, a significant portion of which likely finds its way to Singapore and Southeast Asia. This trend underscores the natural synergy between a gold-exporting nation like Japan and a burgeoning bullion hub like Singapore.
With continued collaboration between JBMA and SBMA, and a supportive regulatory environment, Singapore is poised to become an even more attractive destination for Japanese companies in the precious metals industry. This influx of Japanese participation, along with Singapore’s own market development efforts, has the potential to solidify the citystate’s position as a leading bullion hub in Asia.
Source: https://sbma.org.sg/