Singapore's Role for ASEAN's Portfolio Investment

TL;DR

This paper examines how geographical distance affects portfolio investment among ASEAN and OECD countries, highlighting Singapore's unique role as a regional financial hub influencing investment patterns.

Contribution

It provides new insights into Singapore's distinct investment behavior and its impact on regional financial integration within ASEAN.

Findings

Singapore's investment elasticity is less negative than other ASEAN countries.

Singapore tends to invest in distant OECD countries, unlike its ASEAN counterparts.

The difference in investment behavior is more pronounced when Singapore is excluded.

Abstract

We investigate the elasticity of portfolio investment of ASEAN and OECD members to geographical distance in a gravity model utilizing a bilateral panel of 86 reporting and 241 counterparty countries/territories for 2007-2017. We find that the elasticity is more negative for ASEAN than OECD members. The difference is larger if we exclude Singapore. This indicates that Singapore's behavior is distinct from other ASEAN members. While Singapore tends to invest in distant OECD countries, other ASEAN members tend to invest in nearby countries. Our study sheds light on the role of a regional financial center in global finance.