Hong Kong’s advantage over Singapore, in being part of China, is turning into a disadvantage.

Since protests against a proposed extradition law erupted, there has been speculation it could be replaced as Asia’s financial hub.

This is both because of speculation Beijing could tighten its grip on Hong Kong and because of Singapore’s business friendly environment. It is not plagued by instability as Hong Kong’s is, has an efficient and low tax system and it’s easy to set up a business.

Stockhead found small caps on the ASX with Singapore as their ultimate parent country of risk – a label which can apply even if a company does not have substantial operations there; or having significant operations there. These companies have gained 13 per cent this year and 14 per cent in the last month.

Frontier Digital Ventures (ASX: FDC) is in the online classified business – similar to Carsales.com (ASX: CAR) and SEEK (ASX: SEK). But it is an investor rather than an operator. It partners with platforms from Pakistan to Bolivia.

While it is headquartered in Malaysia it has significant operations in Singapore and Hong Kong. Because of its multiple bases it is arguably better placed to withstand impacts from Hong Kong.

You can serve the world from Singapore

De.mem (ASX: DEM) is a water treatment business servicing government and mining plants in Australia. It also manufactures a high tech membrane at the end of its water treatment that separates other molecules from water molecules.

Property developer AvJennings (ASX: AVJ) was founded in Australia but moved its headquarters to the Lion City. As one of the world’s most densest places, property development would be lucrative in Singapore.

While its profit fell at the start of this year due to decreased lending appetite in Australia, it will be ideally placed if a rebound occurs.

GLG Corp (ASX: GLG) is in the fashion business owning its own textile factory that specifically focuses on the Chinese market.

Neptune Marine Service (ASX: NMS) provides inspection, repair and maintenance to petroleum and energy infrastructure providers. Its clients include South 32, Oil Search, BP and Chevron. While Neptune is based in Perth it is owned by Singaporean-listed MRQ Group.

AI platform Open DNA (ASX: OPN) helps online retailers sell their products. It has a  particular focus on China through WeChat and Alipay as well as its own platform RooLife that is exclusively for Australian products. It is not yet profitable but in recent quarters its revenue has surged.

Hong Kong or Singapore? Why can’t we have both?

The final stock is debt-restructuring business Credit Intelligence (ASX: CI1). Despite having substantial operations in Hong Kong, it has recently made Singaporean acquisitions including ICS Funding and Hup Hoe Credit. These will allow the company to be earnings accretive.

While the trade war has hurt several businesses, Credit Intelligence argued in a recent investor presentation this could benefit them. It could help people with debt restructuring and personal insolvency services.

Code Name Price (23 July) Market Cap 6 Month Return (%) 1 Month Return (%)
DEM DE.MEM LTD 0.185 $27.8M 43 67
AVJ AVJENNINGS LTD 0.59 $243.7M 9 7
GLE GLG CORP LTD 0.13 $9.6M 0 0
OPN OPENDNA LTD 0.04 $10.6M -9 -10
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