The Next Asian Financial Center?

[Soultrader 12]

After returning from FIA Singapore, one of the hottest topics discussed was the next Asian financial hub. Tokyo is gradually losing its position due to the political uncertainty, financial regulatory inflexibility, and too expensive to do business in Tokyo. Add the fact that Japan lacks english speaking ability.

 

China does not currently have a futures market either and Asia's fixed income market is rather immature compared to the west. Where do you think the next Asian financial center will be? Please cast your votes and let us know what you think.

[Tams 20]

Hong Kong recent IPOs have raised more money than anywhere else in Asia,

they are in a position to take the lead.

but the money they raised are mostly for HK stocks...

They have to expand their horizon if they want to be a leader.

ie. they need an international outlook,

also, they don't have a bond market,

and their options market is immature.

[Tams 20]

Korean market is very active...

but they don seem to persuade much international business.

[Soultrader 12]

Korea is definitely a long shot although the exchanges and FCM's are now working on attractive international clients. KRX guys did seem a little arrogant though.

 

HK would be interesting as they also list Chinese companies. I do think that capital gains tax laws will be a key factor for firms entering these countries. Infrastructure as well and the social factors that would allow ex-pats to live and adjust easily. Singapore seems to be one of the most friendliest nations in Asia for foreigners. Its just that the market is still small.

[Tams 20]

Singapore is a fantastic place...

I love the people,

I love the city,

I love the food...

 

the people are smart and well educated,

their attitude are open and progressive,

the infrastructure are well designed and implemented,

the city (country) is geographically centrally located,

they have all the prerequisites to be successful,

but somehow... they never attracted enough business to make a solid base.

[robertm 10]

Singapore is a fantastic place...

I love the people,

I love the city,

I love the food...

 

the people are smart and well educated,

their attitude are open and progressive,

the infrastructure are well designed and implemented,

the city (country) is geographically centrally located,

they have all the prerequisites to be successful,

but somehow... they never attracted enough business to make a solid base.

 

Singapores drawback is it's getting expensive. They are seeking to double the population of an already finite space, it's the only country in the world I encountered having to pay the agent to find you an apartment, everywhere else I have been the landlord pays the agent to find a tenant. Certainly it's infrastructure is great though, second to none for city design and layout, and a steady currency.

 

Malaysia is an interesting crossroad between East & West & Middle East. It's cheap, attracts the Arab money with it's Islamic culture, English speaking, has an active expat attraction program & 10yr tax break to attract biz. Unfortunately Islamic law is restrictive to financial progress (some brokers have told me they aren't even allowed to advertise in country).

 

Malaysia's government is a huge mess though & their attempt at becoming an IT hub was laughable given the state of internet infrastructure, but if you are an IT company based in Sing it's very easy to relocate across the bridge a few hours rather than transplant into a new cultural zone (Dell has taken the Malaysia route for example). If the Gov wasn't so busy infighting and lining their own pockets it could easily steal some of the zing from Singapore, but I don't see any inclination for this to happen.

 

Oh and the Ringit (Malaysian currency) is worthless trash :rofl:

Edited December 8, 2009 by robertm
dumb typos

[sneo 10]

I guess there are a couple of factors to consider as to whether the investors/financial institutions go to the respective places to set up business?

 

The tussle is usually between Hong Kong and Singapore as the "next" Asian Financial centre, but I guess both could cater to different requirements - depending on asset classes, what kind of capital the people are looking for, what roles does the investors/FI want to fill in.

 

Both are more or less quite good in govvie friendliness, infrastructure, accessibility to capital and more or less has some minor "defects" like Singapore is expensive, Hong Kong is highly polluted etc.

 

From what I see, majority of the houses/hq for trading still resides in Tokyo and Hong Kong, while Singapore is mainly an ops, middle office dominant area. Its pretty tough to get trading jobs in major asset classes in Singapore (unless you talk about local equities, there still are roles in Singapore but I see its mainly in brokeages and not yet on bigger fund houses).

 

of course, if you ask me to pick, I will pick my own home country - Singapore o.oV

[robertm 10]

One point to not about Sing is the iron fist of law that dominates everything there. The requirements for opening a retail account are much higher than in many countries, simply ruling many people in the region out of participating in the market (they go via Aus or UK etc instead). From a view of regulating large players though, this is somewhat attractive.

 

In an interesting twist the Malaysian central bank shut down the 2nd coming of the FX expo to the country on Friday just as it was due to open (some politics at play though as their is a competing expo player dominating Asia), declaring FX trading a money laundering vehicle lol. I'm not sure what that means for all the expo's scheduled for next year that people are committed to already here, but there were some people that flew a lot of equipment and staff a long way for nothing on the weekend.

[sneo 10]

One point to not about Sing is the iron fist of law that dominates everything there. The requirements for opening a retail account are much higher than in many countries, simply ruling many people in the region out of participating in the market (they go via Aus or UK etc instead). From a view of regulating large players though, this is somewhat attractive.

 

I gather you are referring to the non-resident retail accounts opening. Think its there to protect the integrity of the financial system and the main idea is just to take in the big boys. the govvie needs to ensure investor confidence. we already have Pan El crisis, Nick Leeson and now Lehman Minibonds.

[robertm 10]

As far as I know it's not a residency issue. As always some brokers are finding ways around it, they are creative if nothing else, but they usually aren't the ones I'd trade with :P

[Tams 20]

Singapores drawback is it's getting expensive. They are seeking to double the population of an already finite space, it's the only country in the world I encountered having to pay the agent to find you an apartment, everywhere else I have been the landlord pays the agent to find a tenant. Certainly it's infrastructure is great though, second to none for city design and layout, and a steady currency.

 

Malaysia is an interesting crossroad between East & West & Middle East. It's cheap, attracts the Arab money with it's Islamic culture, English speaking, has an active expat attraction program & 10yr tax break to attract biz. Unfortunately Islamic law is restrictive to financial progress (some brokers have told me they aren't even allowed to advertise in country).

 

Malaysia's government is a huge mess though & their attempt at becoming an IT hub was laughable given the state of internet infrastructure, but if you are an IT company based in Sing it's very easy to relocate across the bridge a few hours rather than transplant into a new cultural zone (Dell has taken the Malaysia route for example). If the Gov wasn't so busy infighting and lining their own pockets it could easily steal some of the zing from Singapore, but I don't see any inclination for this to happen.

 

Oh and the Ringit (Malaysian currency) is worthless trash :rofl:

 

 

I love diving in Malaysia.

I love hiking the KK,

golfing everywhere,

food from the street vendors.

(not all the food tho, you know which ones I mean, LOL)

 

Maylaysia has the land that Singapore does not have.

Maylaysia has the natural resources that Singapore does not have.

Malaysia even managed to secure some hi-tech manufacturing investments,

but I don't think Malaysia ever aspired to be a financial center.

 

 

 

p.s. very soon, everybody will be in the Royal family.

[charles1 10]

I think for the most part in terms of "the next Asian financial hot spot" Tokyo is still leading the way, and yes there is plenty of uncertainty. But there is unrest all over the world. Just when you think it's over some other country pops up in turmoil, so there's plenty of time before things become stable. As for China they just introduced a futures market this year, (or very late 2009).Considering the lastes news with google their gov't still has a major hold on things. Or did you forget about the Olympic Chinese snowboard this year who got band from the opening ceremony's because he wore his suit too lose. China still has a lot of gov't control and even though the hand is loosening its still no where enough to start a trend. Especially now that there economy is getting hot from the inside. As far as Singapore it remain a tech hot spot i.e. Seagate has a base and they too are very strict. China and Asian countries are very morals based and markets don't have morals, just boundaries people try to work outside of. Tokyo in my opinion is still the hot spot and will continue to lead the way. They are a smart nation, there's a lot of liquidity, and they have shop setup already pretty well. Just like everyone speaks the language of love, everybody speaks the language of money.

[robertm 10]

Looks like another vote for HK/China (given ASX/SGX deal not moving yet).

 

Hong Kong Brokers First to Get Direct Access to Tokyo Exchange - Bloomberg

[Nick1984 10]

Its got to be Singapore/Australia. The Singapore Stock Exchange (SGX) is in merger talks with the Australian Securities Exchange (ASX). This merger would create the most sophisticated market place in the region and have the highest market turnover by far.

 

I've been to India, HK, as well as Singapore and the only rival I can see is HK as the size of deals being made are huge as people looking to get into China go via HK.

 

China will never get the size to rival an SGX/ASX merger because of the political red tape involved. To buy A shares on the Shanghai Stock Exchange is far too hard. There are not very many QFII licenses around the whole world and they are very very hard to obtain.

[robertm 10]

And the plot thickens...

 

Soaring Hong Kong Rents Prompt Financial Firms to Shift - Bloomberg