The status of London and New York as the world’s biggest financial centres probably won’t change anytime soon. But, as with anything else you can quantify, financiers want to know what’s coming next: which cities will rise from relative insignificance to wield enormous financial power. This month, to that end, CNN’s Future Finance blog released a list of nine cities they reckon will become financial centres at some hazy point in the future.
Some of the results are less surprising than others – Shanghai, for example, has managed to fill its built-from-scratch financial district, Pudong, with the offices of international companies in under 20 years. Dubai is building the world’s biggest, well, everything; little wonder they’re gunning for status as a financial centre too.
Others, however, are a little less predictable. Casablanca, the main port city of Morocco, only came 62nd out of 83 in a recent Global Financial Center Index (GFCI) report. However, when GFCI asked financial professionals to predict cities which will become more financially significant in coming years, it ranked first.
This was largely due to the city’s location, which it allows it to act as a bridge between Africa and Europe: Hicham Zegrary, director of operations and institutional affairs at the Casablanca Finance City Authority, told CNN it’s "easier to do business with African countries from Morocco". This will become more and more useful as the economies of large African cities grow (10 are predicted to triple by 2030). The Casablanca Finance City Authority (CFCA), set up four years ago, has attracted 100 companies so far, including BNP Paribas, AIG, Clifford Chance and BCG.
Another surprise is Busan, South Korea’s second city, which in GFCI’s survey of financial professionals placed second. It, too, operates a busy port, the fifth busiest in the world, and boasts the world’s largest shopping centre. To increase its financial influence, the city is building a new financial district, and is offering incentives including subsidised land, training subsidies and tax exemptions to persuade companies to settle there.
Kuala Lumpur makes the list because, as Saif Malik, managingdirector for Standard Chartered Bank Malaysia, puts it, it’s filling the "niche in Islamic banking". Over the past few years, Islamic finance has actually grown two or three times faster than conventional banking, according to research carried out by Ernst & Young. Kuala Lumpur’s relatively stable political environment when compared to other centres of Islamic finance, makes it an attractive city for investment.
All that said, of course, London and New York won’t be giving up their crowns quite yet. This graph shows the value of the financial sector for four of the nine cities, compared with London and New York:
Financial services sector. Source: CityMetric Intelligence.
So there’s no reason to think that any of these behemoths will be overtaking the existing financial centres any time soon. But what is clear is that the volume and variety of locations of financial centres will increase as developing economies grow.