The Future of Asian Financial Centres
The most recent Global Financial Centres Index confirmed New York and London are the only two truly global financial centres while highlighting Tokyo, Hong Kong and Singapore as Asia’s regional financial centres. With the rise of the rest, Asia’s financial centres will rise in importance. The City of London did a study on what might the future of these three centres look like. There is a full listing of City of London reports on their webpage, where you can download the full ‘Future of Asian Financial Centres’ study here.
Some interesting points raised are as follows:
While Singapore has done an excellent job as a centre of high networth individuals, and as a financial gateway for India, it’s Indian role will fade with time as Mumbai rises. It lacks a hinterland, which Hong Kong and Tokyo both have.
Tokyo has lost its chance to be the pre-eminent financial centre of Asia, and with declining demographics and shrinking domestic market, and the peculiarity of Japanese culture, it will remain a regional center serving Japan.
Hong Kong’s great fortune is to be reunited with mainland China. With China’s rise, it’s own fortune looks good. There are competing centers in Shanghai and Beijing, so the situation is fluid still.
The report ends with noting that it is unlikely a pan-Asian financial center would emerge yet. Rather it’s more of the same regional centers. Asia is more integrated trade wise then financial flow wise. Place and past history, as the report eloquently sums up, cannot be easily overcome. With the collapse of G3 demand, China and India both have a chance to deepen and widen their domestic markets, this further entrenches Hong Kong (and Beijing, Shanghai) and opens up an opportunity that Mumbai will likely grab. Is Singapore content to be the Switzerland? Is there another role it can play?