The war in the Middle East may have reinforced Singapore’s safe haven status for investors seeking to diversify from Dubai and navigate geopolitical tensions and global volatility, according to some industry players.
The Dubai Financial Market General Index has shed roughly 15% since Iran retaliated against the war started by Israel and the US by launching a series of attacks on the United Arab Emirates on February 28. Singapore’s benchmark stock index, by contrast, has dropped around 2%.
Singapore had already been gaining attention from investors navigating geopolitical risks and global market uncertainties, especially after the government introduced a series of measures in 2025, including a S$6.5 billion (US$5.08 billion) capital injection to bolster liquidity and stock trading.
According to Ryan Lin, a director at Bayfront Law LLC, it’s natural for investors to consider Singapore in any geographic diversification of their investments, particularly when the wealth originates from Asia.
He says he has received enquiries from high-net-worth clients on the possibility of reallocating a portion of their assets from the Middle East back to Asian financial centres such as Singapore or Hong Kong.
“However, it would be inaccurate to characterise this as a large scale capital outflow. In most cases, these enquiries form part of prudent contingency planning,” Lin says. He prefers to describe it as reflecting a “measured approach to diversify”.
“Psychologically, Dubai has ceased to be the untouchable safe haven as it was previously,” he adds.
A spokesperson for Singapore’s DBS Bank, which set up a branch in Dubai in 2006, says many of the lender’s clients in the six-member Gulf Cooperation Council (GCC) – Saudi Arabia, UAE, Qatar, Kuwait, Oman and Bahrain – have diversified their assets and are holding them across multi-jurisdictions, including Asia, and are taking a wait-and-see approach.
“We have been continually working with our clients to double down on asset diversification and risk management to mitigate the evolving macroeconomic and geopolitical environment,” the spokesperson writes in an email, responding to questions from Asia Asset Management.
Dimmed for good?
Dubai’s stability in the turbulent Middle East region had enabled it to become a financial hub, competing against more established rivals like Singapore and Hong Kong.
The emirate’s main draw is zero tax on income, capital gains and inheritance. Entrepreneurs, ultra-high-net worth individuals and family offices from Asia, including China and India, have increasingly chosen to park their assets in Dubai in recent years.
But the war has dimmed Dubai’s allure. This could be permanent, according to Gerard Lee, a former chief executive officer of Singapore asset manager Lion Global Investors.
“Dubai has built its reputation as a financial centre owing to its good track record on the online security and robust regulatory ecosystem. The possibility of war happening in Dubai has been largely ignored until now,” he says.
“With the recent hostilities between US-Israel and Iran, this confidence has been shattered. Unfortunately, this will permanently affect Dubai’s attractiveness as a wealth and asset management centre,” he adds.
Capital outflow
There is as yet no definitive data on any capital outflow from Dubai to Singapore or other safer destinations.
“We consider the risk of capital outflows has increased for financial institutions, posing a greater risk to banks in the [GCC] region,” analysts at S&P Global Ratings wrote in a report on March 11. “Ultimately, the duration and the scope of hostilities will determine the magnitude of outflows.”
Singapore represents a safe harbour in a volatile macroeconomic world, where local stocks offer promise of gains, according to a global market outlook published by Swiss private bank Julius Baer in January.
Lee believes any outflows from Dubai is unlikely to head to markets in the West, China and Russia – where the capital likely originated from.
“From the process of elimination, Singapore will be a likely winner owing to the critical mass that Singapore has amassed over the years as both a wealth and asset management centre,” he says. “Dubai’s loss is another centre’s gain.”
