Financial centers of the future: Shanghai, Sydney or Dubai?
In the 13th century, Florence was still considered the world's leading financial center. Genoa and Venice were added later, before Amsterdam became a hub of trade in the 17th century. In today's fast-paced, globalized world, there are several important financial centers — and emerging metropolises. But which will become the global financial centers of the future and challenge the current leaders New York, London and Singapore?
What characterizes a financial marketplace?
A financial center is a city or a country with a high concentration of banks and stock exchanges, where a variety of high-volume financial transactions are carried out. Financial centers therefore play a decisive role in capital allocation, economic development and helping companies and individuals manage their wealth. Financial centers are also important for creating jobs and attracting international investment. In principle, financial centers can be four categories Allocate:
- National financial centers:
Are based on the needs of domestic market participants.
- Regional financial centers:
Are responsible for an economic region.
- Offshore financial centers:
They have a low tax rate, low labor costs, or low market regulations.
- Global financial centers:
Are tailored to the needs of customers all over the world.
The competitiveness of financial centers is compared by Global Financial Centres Index. More than 100 financial centers worldwide are rated based on the opinions of more than 9000 international experts. The index is published every six months by the City of London Corporation. But which factors play a role in defining or evaluating a financial center?
For example, the business environment. This includes local regulation, tax rates, levels of corruption, economic freedom, and opportunities to process transactions. Auch Human capital factors play an important role. They summarize the availability of qualified workers, the flexibility of the labor market, the quality of commercial education and the quality of life. Infrastructure factors take into account the price and availability of office space at the location as well as public transport. Die Financial sector development In turn, assesses the volume and value of trade on capital markets and other financial markets, the cluster effect of the number of different financial services companies at the location, and indicators of employment and economic performance. reputation and general aspects take into account more subjective aspects such as innovation, brand attractiveness, cultural diversity and competitive position.
These are the most important Global Financial Centres 2023
According to data from the current The Global Financial Centres Index 34 is in New York, London and Singapore unchanged in the top three places.
- New York is known for its legendary Wall Street in Manhattan's Financial District. Among other things, you can find the New York Stock Exchange (NYSE) and the fully electronic tech exchange NASDAQ. As a financial center, New York also has a major influence on our local share price performance. It is not for nothing that a stock market proverb says: “When Wall Street coughs, the European stock exchanges get pneumonia. ”
- london lost its place at the top of the table in September 2018 - two years after Brexit - but has maintained second place since then. Since the Middle Ages, the financial sector of the British capital has played an important role worldwide. In addition to the London Stock Exchange, the London Bullion Market — the world's largest trading center for gold — is also of great importance. London is also the seat of many “big banks”, such as the Bank of England, Barclays and HSBC, which actually comes from Hong Kong.
- singapore has experienced a brilliant rise to become one of the most important global financial centers. The government of the city-state, which has created favourable conditions for the financial sector, has made a significant contribution to this. These include well-developed infrastructure, legal frameworks that support the financial services sector, and tax benefits. That is why Singapore is already referred to as “the new Switzerland.” In addition, the metropolis is considered the most important hub for East Asian banks and financial groups and therefore plays a key role in supporting economic development in the Asia-Pacific region.
Which financial centers could become more important in the future
But the current ranking is not set in stone. In addition to potential geographical advantages, factors such as digitalization, demographic change, innovative infrastructure solutions, attractive regulatory frameworks and economic policy influences are likely to play a role in the evaluation of financial centers in the future. Die World Alliance of International Financial Centers (WAIFC) has therefore published a white paper in cooperation with the Dubai International Financial Centre (DIFC) and the Z/Yen Group published, which addresses the question of how financial centers around the world are responding to today's challenges, developing a common vision, and which major cities could become more important. At the forefront are:
Shanghai:
The Chinese metropolis of Shanghai has only become the focus of the financial world since 2009, when the Chinese government declared that it wanted to expand the city into an international financial center. Today, Shanghai is actually a location for internationally important credit institutions and investment banks, and the local stock exchange is also attracting more and more attention. In addition, the Chinese government is working to liberalize the financial sector, making it easier for foreign companies to access the country's foreign exchange market.
Sydney:
The Sydney financial center benefits from its proximity to Southeast Asia and its past as a British colony. Since Australia is also an important supplier of raw materials, Sydney has access to a huge and significant market. In addition, the city has a well-developed infrastructure and a highly skilled workforce, which makes the city an attractive location for companies. As a result, more and more financial companies are opening offices in Sydney, contributing to the city's growth as an important financial center in the Asia-Pacific region.
Dubaï:
The Emirates and Dubai attract rich investors with low taxes and a modern healthcare system. As a potential financial center of the future, Dubai also has other advantages. The superlative metropolis has made enormous progress on its way to becoming a global financial center in recent decades due to the rapid expansion of its financial sector. The city government has made significant investments in the city's infrastructure and created a more favourable regulatory environment that makes it easier for companies to operate in Dubai. State-of-the-art amenities, a vibrant living environment and a commitment to sustainability also make Dubai an attractive location for talent, investors, entrepreneurs and companies looking to expand in the Middle East and beyond. At the heart of this thriving urban and business ecosystem is Dubai International Financial Centre (DIFC) - one of the most modern financial centers in the world and the leading financial hub for the Middle East, Africa and South Asia (MEASA).
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