Global financial hubs have enormous economic clout. These cities are home to the world’s leading financial institutions, stock exchanges, banks, hedge funds, and insurance companies. They offer high living standards and attract talent from all over the world. Here we take a look at the top ten biggest financial hubs in the world.
Financial Hubs Today
British think tank Z/Yen Group and the China Development Institute have published the 27th edition of the Global Financial Centres Index. The tanking compares the competitiveness of the world’s leading financial cities. Since 2007, the financial center ranking publishes twice a year.
It compares the competitiveness of financial cities based on a survey of more than 29,000 people worldwide. It also considers more than a hundred indices from the World Bank, the Economist Intelligence Unit, and the Organization for Economic Co-operation and Development (OECD). The financial hubs rankings include these five key areas – infrastructure, human capital, business environment, financial sector development, and reputation & general factors.
Top 10 Financial Centers in the World
These are the top ten biggest financial centers in the world, according to the 27th financial center rankings.
10- Los Angeles
Los Angeles is not just about glitz and glamour. It has also emerged as a global business and finance hub. Los Angeles jumped from 19th place in 2017 to 13th spot last year. It occupies the 10th spot with a score of 723 in the latest ranking.
9- Geneva
The Swiss city made a huge jump, from the 26th spot in last year’s GFCI. Geneva currently scores 729 to occupy the 9th spot in the latest GFCI report. The Swiss hub is one of the most livable and most expensive locations on the planet. Geneva is home to several financial institutions, asset management firms, and watchmakers.
8- San Francisco
Even though San Francisco’s score declined from 736 to 732, its ranking jumped from 12th to 8th. Every financial headquarter except Geneva witnessed a decline in its score compared to last year. San Francisco is a major technology and financial hub. It is home to many large financial institutions and venture capital firms.
7- Beijing
This year, Beijing took 7th place, unchanged from last year even though its score declined from 748 to 734. Beijing has often is described as the ‘Billionaire Capital of the World‘. Beijing’s Financial Street is lined with headquarters of the People’s Bank of China, large state-run banks, and insurance companies.
6- Hong Kong (HK)
HK is one of the most significant financial locations in Asia. Since last year, the city has suffered a little due to pro-democracy protests, which disrupted the transit, retail, and tourism in HK. The Special Administrative Region of China has a high concentration of banking and financial institutions.
5- Singapore
Singapore slipped from 4th to 5th place this year, but it is still one of the world’s most business-friendly countries. The island-nation has transformed its economy on the back of hard work and political stability. Singapore is a leading destination for wealth management and insurance firms.
4- Shanghai
Shanghai is home to the world’s fourth-largest exchange with a market cap of over $4 trillion. Experts predict Shanghai will become the world’s biggest financial hubs within a decade. In the latest ranking, its score (740) is just one point behind Tokyo.
3- Tokyo
Tokyo is the world’s third-biggest financial center with a score of 741 with many top banking, insurance, and financial services firms located in the city. The Tokyo Stock Exchange is the third-largest in the world, behind only NYSE and Nasdaq. With a rich human capital, Tokyo is both a costly and healthy business environment.
2- London
Despite Brexit, London is the second biggest financial center on the planet with a score of 742. London has been a global financial hub since the London Stock Exchange was founded in 1698. However, the city’s economic prospects don’t look promising because businesses move their offices and investments to other cities in Europe due to Brexit. London could fall behind many other cities in the coming years.
1- New York
New York retains the title of the world’s leading financial hub. It is home to many of the world’s largest banks, insurance companies, hedge funds, credit rating agencies, and private equity firms. Two of the world’s largest stock exchanges by market capitalization – New York Stock Exchange and Nasdaq – are based in New York. It’s a global city with a mix of various cultures.
Where are Financial Centers Heading?
The rapid rise of business hubs like London seemed invertible all until Brexit. Additionally, COVID-19 has dramatically impacted the acceptance of working for home, well beyond the business sector. Since 2020 due to factors such as coronavirus, it appears that in-person meetings are becoming less vital. Also, recent events such as Brexit and HK’s “merger” with China could complicate these two cities’ rankings and ratings for the business environment. However, it may surprise you that a recent rating has London catching up on New York regarding financial sector development and other metrics.
FAQs
What is the financial district of London called?
Located in London’s heart, Canary Warf and “the Square Mile” is one of the biggest finance hubs on earth.
Why is New York the financial capital?
New York is considered the place for finance due to its having the largest stock exchanges in the city, the New York Stock exchange, and the NASDAQ. The city has become a hub for wall street due to its attraction of human capital and funding.
How did Hong Kong become a financial center?
Under the treaty of Nanking in 1842, China ceded the city to the British. HK quickly became a center for financial sector development due to a robust financial environment and reputation. Additionally, after the communists took over China, many vital industries went over to British ruled HK as an intermediary to China.
Which is the biggest financial market in the world?
The currency market is the biggest by size and liquidity. FX trading volume beats stocks by a massive 28 to 1 level.
Is Sydney a financial center?
While Sydney is known for its economic institutions’ diversity, the city ranks 32 on the GFCI index. However, Sydney has a significant impact on its domestic economy with the city, accounting for 25 percent of the total Australian GDP.
Summary
The world is rapidly changing before our eyes. The list of top business hubs is becoming more Asian and less European and North American dominated. However, if the coronavirus pandemic teaches us anything it’s that the future is unclear, it would be foolish to bet against hubs like New York City vanishing anytime soon.
