London is back at the top of the world’s international financial centres, pushing out New York again, according to a world ranking of IFCs prepared by The Banker magazine. London excelled in factors such as business friendliness and the depth of the various business clusters present. It generates the largest value of outward as well as inward foreign direct investment in the financial sector.
A recent article in The Economist says international trading in China’s yuan currency has tripled over the past three years to $120 billion a day, with London accounting for a third.
On 29 October, speaking at a World Islamic Economic Forum (WIEF) meeting in London, Prime Minister David Cameron said that the UK also intends to become the first country outside the Islamic world to issue its own Islamic bonds, known as sukuk. A new Islamic index is to be launched on the London Stock Exchange to establish the City as one of the world’s leading centres of Islamic finance. According to Reuters, The bond, expected in 2014, will be £200 million ($321m), smaller than earlier planned and would provide a much-needed liquidity management tool for Britain’s six Islamic lenders and could encourage local firms to consider issuing sukuk of their own.
Africa’s IFCs – Johannesburg and Mauritius
Among The Banker’s IFCs, Mexico City has jumped 15 places to a world ranking of #15. At the end of 2012 Mexico City hosted its largest initial public offering with the $4.1bn listing of the Mexican operations of Spanish bank Santander. Johannesburg is the only African IFC to feature on the main list, coming in at 35th which puts it ahead of Munich (36) and Bangkok (37) but behind Copenhagen (14), Stockholm (24), Edinburgh (30) and Madrid (34).
Mauritius is ranked 6 out of 13 specialized financial centres, up one place and now following Cayman Islands, Jersey, Guernsey, Bahamas and Bermuda.
The Banker’s ranking of IFCs is based on data ranging from financial markets indicators to economic potential to business environment factors. The ranking focuses on the level of international business and the value offered to institutions seeking to expand their international operations as well as international appeal. Different data is used for the specialized centres.
London had a similar score to last year’s winner, New York on a financial markets data category. London led in various components that contributed to its financial markets score, such as: the number of new foreign listings (a total of 36 against New York’s 29) and the issuance of international debt securities ($3,401bn against New York’s $1,977bn). New York has the largest volumes of assets under management ($920bn) among firms that it hosts.
Singapore and Hong Kong are in third and fourth positions, respectively, the latter displacing Frankfurt (now 5). Beijing is the most improved Asian IFC, moving from #36 in 2012 to #32 this year in the overall ranking. It is now ranks #7 among Asian IFCs, overtaking Kuala Lumpur (8). Bangkok has also climbed 4 positions in the global ranking and comes in ninth regionally.
Number one global IFC by cost is Copenhagen, with office occupancy costs lower than many emerging markets and low employment-termination costs.