Singapore has pledged to offer potentially lucrative tax exemptions to individual fund managers such as hedge fund traders, a sign of intensifying competition with Hong Kong as the two financial hubs battle to win business from asset managers.

The Monetary Authority of Singapore on Wednesday announced a suite of measures to bolster the country’s attractiveness to the asset management industry.

Chief among them is a proposal to exempt a share of profits made by fund managers and investment professionals when they deliver “strong returns” for investors in qualifying funds — a move that appears to match Hong Kong’s recently announced plan to slash taxes on carried interest.

The implications for the hedge fund industry from the tax relief are potentially huge, as Singapore and Hong Kong vie for assets and talent. Such firms’ returns are almost entirely driven by the strength of the professionals who decide where and when to invest, and companies will often establish entire teams and offices around their star performers.

“Two of Asia’s financial centers are going all-in on backing our industry in a big way in the same season,” said Kher Sheng Lee, Asia-Pacific co-head at the Alternative Investment Management Association. “As Asia rises as a whole, more global capital will flow here. Asia has never mattered more.”

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Much of the detail of Singapore’s announcement remains unclear. The tax exemption may be sweeping — covering not just hedge fund managers but those working at family offices, venture capital firms and a raft of other institutions.

While the tax exemptions will apply to personal income generated this calendar year, MAS Deputy Chairman Chee Hong Tat said more details would be revealed at Singapore’s 2027 Budget — an event that typically takes place around February.

“Singapore’s asset management industry is a key growth engine for the financial sector, accounting for around 15 percent of the sector’s output and 13 percent of its employment,” he said. “My colleagues and I will do what it takes to maintain and uphold the competitiveness of our financial services industry.”

Singapore will also launch a new hedge fund investment program to anchor hedge fund managers in the city-state. And it will loosen income requirements for Overseas Networks & Expertise Pass visa applicants. Where it previously required a base salary of S$30,000 ($23,500) a month, this can now include other forms of income for senior executives in the asset management industry.

The move comes amid a resurgence in the fortunes of Hong Kong, Singapore’s major rival for asset management business in the region. The promise of lower taxes and a rebounding market for public listings has helped drive many expats back to Hong Kong. Rents and visa applications are recovering along with waiting lists for popular international schools.

While Hong Kong has long been the hedge fund industry’s main center in Asia, Singapore had been gaining traction in the space. Assets managed by hedge funds in Singapore rose 37 percent in 2024 to hit S$327 billion as global firms from Citadel to Jain Global expanded operations there. But that growth slowed in 2025 to 5 percent, according to the most recent data.

Hong Kong’s tax breaks center on carried interest — a share of investment profits that can mean big bucks for star fund managers. The proposal, which is still making its way through the legislature, has sparked debate and lobbying over which types of asset managers can be included.

Hong Kong’s total assets under management grew 20 percent in 2025 to a record HK$42.2 trillion ($5.4 trillion), thanks in part to a surge in net fund inflows, according to the latest data. Assets managed in Singapore grew 10 percent last year to S$6.68 trillion ($5.2 trillion).