London remains the most competitive city for business, according to the latest edition of the Global Financial Centres Index 10, but New York and Hong Kong are a whisker away and catching up. But overall results were dubiously optimistic, with 73 of 75 centres improving their rating, including last-place Athens
London remains the most competitive city for business, according to the latest edition of the Global Financial Centres Index 10, but New York and Hong Kong are a whisker away and catching up. London has 774 points (down one), with New York on 773 (up four) and Hong Kong on 770 (up eleven). But overall results were dubiously optimistic, with 73 of 75 centres improving their rating, including last-place Athens.
Factors considered include regulation, corruption, austerity, tax rates and infrastructure, as well as survey data from financial professionals. In the survey, London was top in categories like wealth management, professional services and asset management, but Hong Kong was first in insurance and New York in banking.
Offshore centres continued to suffer from the damage to their reputations which began in the financial crisis. Jersey was up two to 21, but Guernsey, Isle of Man, Hamilton, the BVIs, the Cayman Islands, Gibralta, Malta, Mauritius and the Bahamas were all down, and none appeared in the top twenty.
Qatar, gaining 39 points, leapfrogged Dubai, which fell eight places despite gaining seventeen points.
An unusual feature of this biannual edition is that all 75 centres were said to have improved, except for London and Shenzhen. Given that even Reykjavik and Athens, the bottom two centres, both in financially distressed countries, improved, the results seem noticeably optimistic.
The survey is produced by Z/Yen Group and sponsored by the Qatar Financial Centre Authority.
Top ten global financial centres
From the report:
The main headlines of GFCI 10 are:
• The three top centres are now only four points apart (there was a gap of 16 points between first and third in GFCI 9). There is no significant difference between London, New York and Hong Kong in the ratings; many respondents from our questionnaire continue to believe that these centres work together for mutual benefit.
• Confidence amongst financial services professionals has (perhaps surprisingly) risen since GFCI 9, as shown by higher overall ratings for virtually all centres (the average increase across all centres is just over 30 points). This is also demonstrated by a significant reduction in the ‘spread’ (measured by standard deviation) of assessments. Finance professionals now seem more confident about which centres are becoming more competitive and which centres less so. Chart 1 shows the rise in overall ratings.
• The Nordic and Eastern European centres are now getting very strong support. Centres such as Tallinn (up 118 points in the ratings), Istanbul (up 86 points), Moscow (up 75 points), Helsinki (up 72 points), Copenhagen (up 55 points and St Petersburg (up 50 points) all demonstrate strong increases in competitiveness.
• The recent crisis in the Euro has affected centres within the Eurozone. The capital cities of the weaker Euro economies are clearly suffering – examples include Madrid down 11 places in the rankings, Dublin down ten places and Milan down nine places. Athens is also down and together with other European centres such as Luxembourg down 14 places and Malta down 11 places these centres exhibit the largest falls in GFCI 10.
• Over the past three years there has been considerable volatility in the ratings of the Asian centres. It seems that the picture is becoming somewhat clearer. The strongest centres are strengthening and consolidating their positions – Hong Kong is up 11 points, Singapore is up 13, Shanghai is up 30 points and Seoul is up 28. Certain Asian centres are now perceived as weaker – Tokyo, Beijing, Taipei and Shenzhen have all fallen in the ranks. It should be noted that the reduction in standard deviation of assessments has meant that the ratings are more closely grouped. This reduction in standard deviation has the effect of making the ranks more sensitive – for example although Shenzhen has declined ten places in the rankings (from 15th to 25th), it has only fallen 11 points on a scale of 1,000.
• Offshore centres have suffered significant reputational damage in the past three years. GFCI 10 shows that many are now recovering as respondents to the GFCI questionnaire recognise the contribution these centres can make to global finance. Guernsey has risen 28 points, the Isle of Man, Hamilton and the British Virgin Islands have all risen 27 points and Jersey has risen 26. The Cayman Islands and Gibraltar have also risen. Jersey and Guernsey remain the leading offshore centres.