Maximum City still a minimal force
London and New York, at one and two, have emerged as the true global centres.
While London and New York, at one and two, have emerged as the true global centres, the action starts after that.
Hong Kong emerges as an international financial centre at number three, followed by Singapore at four, ahead of Zurich, Frankfurt and Tokyo. The Index highlights the changing nature of Asian financial markets, with Hong Kong considered to be a real contender to become a global financial centre. The Global Financial Centres Index is the first study to continuously rank financial centres. Based on the results of online surveys and 47 indices of competitiveness, the study has been conducted for the City of London by Z/Yen, a financial services consultant along with PriceWaterhouseCoopers.
The current thinking is that Shanghai and Tokyo are unlikely to be global centres. Hong Kong seems the most likely Asian city to rise assisted by a strong regulatory system and a well-skilled financial services workforce. GFCI shows a change in emphasis on the areas of competitiveness. Currently, the regulatory and tax environments are judged to be the biggest contributors to overall competitiveness, a change from 2005, when a survey of London found that people and skills were seen as the most important factors in competitiveness. Some of the key areas ranked include people, business environment, market access, infrastructure and general competitiveness. Other centres like Zurich, which ranks 5th, just ahead of Frankfurt, scores as a niche centre with strong private banking and asset management, but loses out on people and general competitiveness. Singapore, while it does well on regulatory, drops to ninth place in general competitiveness. Centres like Sydney, which score on quality of life, again drop on general competitiveness.
And Tokyo, while it scores well on liquidity, fares badly in regulatory environment, business environment and people. Mumbai at 39, has a long way to go. Between London and New York, regulation is cited as a decisive factor. Too onerous a regulatory environment can directly affect the competitiveness of a financial centre, the research finds. However, London is beginning to lag in terms of taxes and a failing transport system. Michael Snyder, chairman of Policy and Resources at the City of London Corporation, which represents UK financial services, said: “To maintain competitiveness, the UK must take action to address concerns over its corporate tax environment.”