Not too long ago, it was universally agreed among the traders and bankers of the world that the city-state of Hong Kong was the place to do business in Asia.
Its reputation as one of the freest economies in the world, as well as a diverse banking and finance sector on par with heavyweights such as London and New York, meant that when it came to dealing with Asian markets, HK was a no-brainer.
However, that all seems to be changing.
Industry insiders have been published a spate of publications over the past year explaining why Hong Kong is over, as other Asian trading hubs become more attractive destinations for capital and talent.
Spiraling living costs, increasingly heavy-handed regulation of the financial sector, a lack of tech-readiness, and rising concerns over the interventionist policies of the Chinese government have all led to Hong Kong losing its luster in recent months.
So, which city will be the next to take the crown? Let’s take a look at the contenders.
Seoul has long been a global center for banking, ranked fifth in the global league tables for the size, wealth, and number of banks headquartered in the South Korean capital.
However, the city is also on the rise as a major trading hub, having risen an astonishing 21 places in the global financial cities index last year. A major contributor to this rise was the development of the fintech sector, as well as a rise in the number of trading platforms in the city.
Financial literacy and knowledge of trading are key to the health of any city’s financial sector, with the popularity of free online tools and trading platforms such as those offered by IG increasing rapidly in Asia due to their accessibility and coverage of the basics.
If it’s purely a numbers game, then Singapore has already bagged the top spot in Asia. Its gargantuan financial sector has one of the highest market capitalizations in the world, while the city holds a unique position of being for the largest foreign currency exchanges on the planet, with more than $517 billion traded every single day. SG also has the added bonus of strong institutions that support the free movement of capital and a highly deregulated financial sector.
Kuala Lumpur has long been an underdog among the major financial hubs of Asia, but that is all changing.
The capital of Malaysia recently completed the gargantuan construction of a new financial district, known as the Tun Razak Exchange (TRX). Masterminds behind the scheme are currently finalizing talks to attract 250 of the world’s largest banks, commodity trading firms, and venture capital funds to the district, promising a full decade of 0% income tax for any company that sets up a base there.
KL has long seen itself as a competitor to Singapore, its wealthier neighbor, and these recent efforts should be read as attempts to move beyond SG’s shadow. Malaysia’s booming economy and sky-high GDP growth rates mean that Kuala Lumpur might just succeed.
Which Asian city will be viewed as the premier finance hub in ten years’ time remains a mystery, but these three are the frontrunners by a country mile.