Hugh Young, chief investment officer of Aberdeen Asset Management Asia, said: "If I had to make a bet I think it probably will."

In 1992, Mr Young chose Singapore over Hong Kong to set up an Asian base for Aberdeen and has watched the once-infant industry take big strides as the city state loosened stiff regulations.

While other experts might play down Singapore's chances, statistics confirm that Singapore's fund management industry is growing rapidly, faster than its more established SAR counterpart.

According to MAS, assets under management in Singapore have risen steadily even during the Asian crisis from S$18.1 billion in 1990 to S$150.6 billion at the end of 1998. One year later they had shot up another 63 per cent to S$246.2 billion, or US$141.49 billion - though still less than a third of the US$450.05 billion under management in Hong Kong.

That growing pool of cash has sparked a rapid rise in the number of fund management professionals working in Singapore, up 18.26 per cent to 913 at the end of last year over 1998. The number of firms was also rising, up 13 per cent to 191, and higher than the 142 firms which responded to a survey by the SAR's Securities and Futures Commission.

"Singapore seems to be catching up quite dramatically," said Mr Young.

While a more welcoming regulatory regime is partly responsible, Singapore is also dangling some powerful carrots. Not only has it offered handsome tax incentives but it has promised to farm out up to S$30 billion from various government agencies for private fund managers to oversee.

There have been a few companies which have closed down their SAR offices in favour of a single Asian base in Singapore. Rothschild Asset Management did so in June last year, but most of Singapore's gains have come from newcomers to the region picking it over the SAR. Among them are US firms such as Putnam Investments and Wellington Asset Management.

Other firms, such as Jardine Fleming Asset Management, State Street Global Advisers and Scudder have established a second Asian office in Singapore.

In the meantime, Singapore professionals are lagging SAR and regional counterparts in the pay stakes, according to figures from recruitment firm The Consulting Partnership. For example, a low-end annual salary for a senior fund manager in Singapore comes to about US$72,000 against US$184,000 in Hong Kong, while a low-end head of marketing earns US$90,000 in Singapore against US$192,000 in the SAR. Bonus expectations across six job categories were only 25.66 per cent in Singapore against 48.33 per cent in Hong Kong.

But those figures were from a survey in February and wages are catching up fast as strong demand drains a limited talent pool.

"We are seeing people move jobs for 20 to 50 per cent more," said Gordon Clark, a partner at The Consulting Partnership. "There's a great deal of musical chairs in Singapore."

But he dismissed as a "myth" the idea that a rapidly growing Singapore is sucking in companies and industry professionals from Hong Kong.

"Singapore is definitely getting bigger, but not at the expense of Hong Kong," Mr Clark said.

However, the threat to Hong Kong may be more subtle. With the world swinging towards putting the onus on individuals to save for retirement, the fund management industry is expected to mushroom. A report by management consultants McKinsey projected that funds under management would rocket from US$2 trillion in 1998 to up to US$12 trillion in 2010.

If Singapore can maintain its rapid growth rate it could obtain what observers call more "critical mass", where there are so many fund-management companies, support firms and industry professionals that it becomes an automatic choice for new firms coming to the region and could cause a rash of defections from Hong Kong.

If wages do go up towards SAR levels, a move to Singapore may become a tempting option for fund management professionals as lower costs and less pollution add up to a better quality of life.

"I understand a lot of people are discussing the opportunities in Taiwan and [South] Korea, markets which are opening up a lot," said Sally Wong Chi-ming, senior executive director of the Hong Kong Investment Funds Association.

In contrast, Singapore's neighbours - Indonesia, Malaysia and Thailand - have lower per capita income, making them less promising ground for fund management companies.

But the SAR has its own growth potential as a fund management hub.

It also has on its doorstep the greatest potential market in Asia. As part of the deal with the United States for World Trade Organisation entry, Beijing said it would allow foreign firms to take minority stakes in fund management ventures.

Andrew Procter, an executive director of the Securities and Futures Commission, said the SAR had its own incentives for the industry, with private managers handling some of the Exchange Fund and now getting a slice of the business from the Mandatory Provident Fund.

The regulatory regime in Hong Kong was also considered superior, Mr Procter said. "We are strong and we have every reason to think that the industry will get even stronger."

Fund-management companies find it quicker and easier to obtain approval to market their products in Hong Kong.

Singapore was trying to catch up and was even copying an industry code of conduct first introduced in Hong Kong, said Mr Procter.

Stewart Aldcroft, head of business development for investment services at Standard Chartered Bank, said Singapore and Hong Kong did not necessarily have to go toe to toe.

"They're good for each other as well as competitive. A fund company which sets up in one place may then set up in the second place," said Mr Aldcroft, who divides his time between the two centres.