MondoVisione

Today Z/Yen Partners and the China Development Institute (CDI) publish the twenty-third Global Financial Centres Index (GFCI 23). We are holding the launch Conference in Qingdao. The GFCI rates 96 financial centres. The top ten are shown to the right. Full details are available here. The main headlines are shown below.

There is an overall increase in confidence for the leading centres. Signs of a bias towards stronger and more established centres are evident with the top 25 centres all rising in the ratings. Ratings fell for all of the lowest 50 centres.
London and New York remain at the top of the rankings and the gap between them in ratings closed to one point on a scale of 1,000. Hong Kong retains third place. London’s rating rose less than the other four top centres.

There is now less than 50 points between the top five centres. San Francisco and Shenzhen moved into the top ten, replacing Beijing and Zurich.

Western European financial centres remain volatile. The top five centres rose in the ratings. Most of the lower placed centres lost ground. Hamburg, Munich, Monaco, and Madrid, rose strongly in the ranks, with other improvements for Paris, Jersey, Edinburgh, and Lisbon. Hamburg in particular rose 38 places in the ranks.

In the Asia/Pacific region, the leading centres improved their ratings. There were significant rises in the ranks for Qingdao, Bangkok, Kuala Lumpur, and Busan. Tianjin and New Delhi are new entrants to the GFCI.

North American centres generally achieved improved ratings and improved their ranks accordingly.This was a reversal from GFCI 22. The exception was Washington DC, which dropped 20 places in the rankings. Montreal also dropped by one place (although its rating was 22 higher than in GFCI 22).

All centres in Eastern Europe and Central Asia suffered a fall in their ratings. However, Cyprus, Istanbul, and Moscow rose in the ranks. Tallinn and Riga both fell over 30 places in the ranks. Astana and Baku are new entrants to the GFCI.

In the Middle East and Africa, only Dubai and Abu Dhabi increased their ratings. Mauritius, Riyadh, and Casablanca improved their ranking despite falls in their ratings.

All centres in Latin America and the Caribbean fell in the GFCI ratings except for the Cayman Islands. Despite the fall in the ratings, six centres rose in the ranks with the Bahamas leading the way rising 22 places. The Cayman Islands are now the leading centre in the region.

European ‘island’ centres fell back after rising in GFCI 22. The British Crown Dependencies of Jersey, Guernsey, and the Isle of Man all fell in the ratings.

Mark Yeandle, Director of Z/Yen Partners and the author of the GFCI, said "All the top centres have risen in the ratings. London remains on top despite Brexit concerns but rose less than any other centre in the top fifteen.”

Professor Fan Gang, President of the CDI, said "Eight Chinese financial centres have entered GFCI and are continuously doing well. As an economist, I am very proud of achievements of China’s economy. However, it is crucial to keep a realistic and sober mind amidst the chorus of praise.”

GFCI 23 Top Ten Centres

1. London 794
2. New York 793
3. Hong Kong 781
4. Singapore 765
5. Tokyo 749
6. Shanghai 741
7. Toronto 728
8.  San Francisco 726
9. Sydney 724
10. Boston 722

Pensions & Investments

inancial service professionals are increasingly confident in the world's leading financial centers, with a bias toward stronger and more established cities, finds the Global Financial Centres index.

London and New York remained on top of the rankings, which scored cities according to assessments collected from 2,300 financial services professionals responding to an online questionnaire. Hong Kong, Singapore and Tokyo also retained their places in the top five.

The 23rd edition of the index, produced by Z/Yen Partners and the China Development Institute, includes 96 centers, up from 92 in the 22nd edition. The firms researched 110 centers, using 103 instrumental factors — quantitative measures provided by third parties including the World Bank. These factors were then combined with respondent assessments and centers were given a score.

London scored 794, up from 780 last year. The remainder of the top five saw more marked increases in their scores: New York closed in on London, with its score rising to 793 from 756; Hong Kong's score grew to 781 from 744; Singapore scored 765 vs. 742; and Tokyo scored 749 up from 725 in the 2017 index.

There were two new top 10 entrants, with San Francisco at eighth place, up from 17th, and Boston rising to 10th from 19th last year. Rounding out the top 10 were Beijing and Toronto, which stayed in sixth and seventh places, respectively, and Sydney, which dropped to ninth from eight last year. Zurich fell to 16th place from ninth this year, while Beijing dropped one spot to 11th.

Centers in North America generally achieved improved ratings and ranks, showed the index.

"All the top centers have risen in the ratings," said Mark Yeandle, director of Z/Yen Partners and author of the report accompanying the index, in a news release. "London remains on top despite Brexit concerns but rose less than any other center in the top 15."

Global Times

The era of "strong demand" in China's housing market is over, with "imbalanced and inadequate" development becoming the industry's top problem, said Yu Liang, chairman of property developer Vanke Group.

Yu made the remarks on Tuesday during a press briefing in Shenzhen, South China's Guangdong Province to explain Vanke's 2017 performance, which was announced on Monday.

Vanke said revenue in 2017 reached 242.9 billion yuan ($38.5 billion), up by 1 percent year-on-year. Net profit reached 28.1 billion yuan, with a yearly increase of 33.4 percent, the company said at the conference.

"In the past 20 years, the unprecedented wave of urbanization in China generated strong demand for commercial residential houses. So we built a lot in a bid to meet that demand," Yu said.

"But things have changed. Many urban housing units have been sold but lie vacant; meanwhile, young newcomers may lack decent housing. This represents the 'imbalanced' and 'inadequate' supply problems in the sector," Yu said.

According to Yu, these emerging problems have driven Vanke to shift its market strategy in 2018. The company will expand its rental businesses in urban and rural areas, as well as develop support services and facilities associated with those units, to ensure that "everyone can have a place to live".

Yu pointed out as an economy matures, housing-related support services such as community facilities, property management or elder care services would be valued much more.

Song Ding, a research fellow at the China Development Institute, told the Global Times on Tuesday that Yu's comment reflected the policy of curbing speculation and other regulatory policies in the industry promoted by the Chinese government in the past year.

Song said Vanke's plans showed in a practical manner that "houses are for people to live instead of investment or other purposes," which will promote a sounder, more balanced real estate market in the long term.

Other Chinese real estate developers are also making similar strategy shifts.

For example, Country Garden said that 3,000 long-term property leasing apartments have already under construction in major Chinese cities in 2017.

Sunac, another property developer, is seeking for an expansion of its businesses. The company bought 91 percent of 13 tourism projects in July from conglomerate Dalian Wanda Group for $6.5 billion, according to Reuters.

Reuters

LONDON, March 28 (Reuters) - Is London’s position as the largest international centre of finance slipping as a result of Brexit?

London has been a critical artery for the flow of money around the world for centuries. The financial services sector accounts for about 12 percent of Britain’s economic output, employs about 1.1 million people and pays more taxes than any other industry.

From its traditional City heartland to the brash Canary Wharf skyscrapers and plush Mayfair townhouses, London represents one of the greatest concentrations of financial wealth on earth.

Its only rival, New York, is centred on American markets, while London has more banks than any other hub, dominates markets such as global foreign exchange and commercial insurance and is home to international bond trading and fund management.

But about a third of the transactions on its exchanges and in its trading rooms involve clients in the European Union. These may be jeopardised after Brexit unless Britain manages to maintain similar levels of access to the trading bloc.

The French finance minister predicts Paris will overtake London as Europe’s most important financial centre in a few years, although supporters of leaving the EU say Britain will benefit over the long term by setting its own rules.

London remained top of the rankings in the annual Global Financial Centres Index released this week by Z/Yen Partners and the China Development Institute, although the gap between it and New York in second closed to one point on a scale of 1,000 and its rating rose by less than the other four top centres.

Reuters is publishing its second Brexit tracker, monitoring six indicators to help assess the City’s fortunes, taking a regular check on its pulse through public transport usage, bar and restaurant openings, commercial property prices and jobs.

Almost a year before Britain is due to leave the EU, the tracker suggests London’s financial districts have been held back, but there is no evidence of a mass exodus.

“London has not come close to taking a mortal blow or anything like it ... The increasing uncertainty though over London’s future has led to a stall in its growth,” Michael Mainelli, Executive Chairman of Z/Yen, told Reuters.

Jobs leaving London?

Firms employing the bulk of UK-based workers in international finance told Reuters that the number of finance jobs they plan to shift out of Britain or create overseas by March 2019 due to Brexit has dropped to 5,000, half the figure six months ago.

This comes amid more conciliatory signals from British Prime Minister Theresa May, while progress in talks with the EU have prompted some companies to delay large staff moves.

The findings suggest that the first wave of job losses may be at the lower end of initial industry estimates, meaning London will keep its place as the continent’s top finance centre in the short term.

London’s finance industry should emerge largely unscathed from Brexit even if thousands of jobs move, the City of London’s political leader Catherine McGuinness says, adding that it could take years to feel the full impact of Brexit.

“All the signs are that companies are just making plans to move the minimum necessary,” she told Reuters, adding “just because you can’t see a massive change suddenly happening you can’t assume everything is okay.”

Hiring numbers

The number of available jobs in London’s financial services industry fell the most in six years in 2017, said recruitment agency Morgan McKinley which hires staff in finance.

It bases its number on the overall volume of mandates it receives to find jobs and applies a multiplier based on its market share of London’s finance industry.

The recruiter found 82,147 new financial services jobs were created last year, a 12.45 percent drop on a year earlier. This is the lowest number of jobs available since 2011.

“Brexit has stalled the growth of jobs. Companies are reluctant to make major investment decisions at the moment,” said Hakan Enver, operations director at Morgan McKinley Financial Services, which carried out the survey.

Commercial property

Reuters obtained property data from Savills and Knight Frank, two of the biggest real estate firms in Britain. Savills calculates the value from all-known property deals within the City of London area.

Savills says commercial property prices in the City of London are now at the highest level since the third quarter of 2016, three months after the Brexit vote, driven by a surge in office purchasing and leasing in the final quarter of 2017.

The price of renting real estate in the City of London district rose 9.5 percent in the last three months of the year, climbing to 78 pounds ($107) per square foot, from 71.21 pounds in the third quarter of 2017, Savills says.

“There has been a lot of exaggeration about the demise of the City,” Philip Pearce, a director at Savills, said. “The expectation post-Brexit was the world would start draining away from the City, whereas the reverse has happened.”

In Canary Wharf, prices were also unchanged in 2017 compared with the year before, Knight Frank, whose data comes from landlords, developers and agents, says. Going Underground Some 400,000 journeys are recorded every day at the three main underground stations that serve the City and Canary Wharf.

Reuters filed Freedom of Information Act requests to Transport for London, to get this data which shows that the number of people using Bank and Monument stations is on course for its first fall since the final year of the financial crisis.

Travellers going in and out of Bank and Monument fell by a fifth in 2017 compared with 2016, the data shows. This follows an annual increase each year since 2009.

In Canary Wharf, the number of people using the station fell by 10 percent, while the number of people using London’s underground network fell about 2 percent
overall last year.

Mike Brown, the commissioner for Transport for London, said it is struggling to explain the drop in passenger numbers.

“Is it an element of economic uncertainty? Is it a handful of jobs here or there maybe not being there this year, compared to last year, or is it actually just that people are working from home?” he said. “It is a bit difficult to be categoric.”

Canary Wharf’s owners did not respond to requests for comment.

City Airport

The number of passengers using London City Airport, a popular gateway for finance executives, fell for the first time since the final year of the 2007-2009 global financial crisis in 2017, its publicly available figures show.

The number of passengers at the airport, close to Canary Wharf’s financial district, fell 0.2 percent last year. That compares with an average annual 8.8 percent increase in the previous six years.

London City Airport said the stagnating numbers were partly caused by some airlines cutting routes.

“We are very confident about the long term future prospect of London City Airport and aviation in the UK, with passenger growth expected to resume in 2018,” a spokesman said.

Bar and restaurant openings Reuters filed a Freedom of Information Act request to the City of London Corporation to find the number of new premises which have applied for licences to sell alcohol and licence renewals.

The number of venues, such as bars and restaurants, with licences to sell alcohol in the City of London in 2017 fell 1.6 percent, data from the municipal local authority shows.

The number of venues applying for new licenses was flat compared with 2016, the data shows, although the City of London Corporation said such fluctuations were normal.

“As some establishments close and others open, it is inevitable that licensing renewal figures will fall and rise but overall, the number of licensed premises in the City has steadily increased in recent years,” it said in a statement.

($1 = 0.7278 pounds)

Reuters

BOAO, China (Reuters) - China should make better use of the country’s funds by looking to invest its large capital reserves in real assets, not United States Treasury bonds, an adviser to China’s central bank said on Monday.

“We are a low income country, but we are a high wealth country...we should make better use of the capital. Rather than investing in U.S. government debt, it’s better to invest in some real assets,” Fan Gang, director of the National Economic Research Institute and a member of the People’s Bank of China’s (PBOC) Monetary Policy Committee, said.

Fan, speaking at the Boao Forum for Asia in southern Hainan province, also said that China’s debt load was a serious problem but that it would not lead to a financial crisis for the country as the debt was mostly domestic and China had ample savings.

He said that the debt overhang was a result of previous overheating of the economy.

“This problem is serious and we need to clean house. We need to contain this financial risk, but it will not cause a financial crisis,” he said.

China’s rising debt burden has raised concerns that it could eventually trigger a financial crisis, with government officials acknowledging the challenge but vowing to contain the risks.

Fan said China’s savings rate is 44 percent of GDP, giving it enough of a cushion to deal with the risks, though he added that it would take time for China to stabilize the leverage ratio.

In an interview with Chinese financial magazine Yicai on Sunday, Fan addressed China’s rising trade tensions with the United States, saying the U.S. feels pressure from China’s rise.

Fan said the United States will take measures, which could include a trade war or blocking Chinese investment in the country, to contain China’s rapid development.

On Sunday, a government researcher told the Boao forum that China was unlikely to sell off its holdings of U.S. Treasury bonds on a large scale as a tactic in its trade dispute with the United States.

“On whether China will reduce its foreign exchange reserves, how policymakers think, I don’t know. I personally believe this possibility is very small,” Zhang said.

China held around $1.17 trillion of Treasuries as of the end of January, making it the largest of America’s foreign creditors and the No. 2 overall owner of U.S. government bonds after the Federal Reserve.

A Chinese vice finance minister said last week that China is a responsible investor of its foreign exchange reserves and that it follows market rules in investing its reserves.

China’s foreign exchange reserves, the world’s largest, rose slightly in March to $3.143 trillion, central bank data showed on Sunday.

Reuters

BOAO, China (Reuters) - China should make better use of the country’s funds by looking to invest its large capital reserves in real assets, not United States Treasury bonds, an adviser to China’s central bank said on Monday.

“We are a low income country, but we are a high wealth country...we should make better use of the capital. Rather than investing in U.S. government debt, it’s better to invest in some real assets,” Fan Gang, director of the National Economic Research Institute and a member of the People’s Bank of China’s (PBOC) Monetary Policy Committee, said.

Fan, speaking at the Boao Forum for Asia in southern Hainan province, also said that China’s debt load was a serious problem but that it would not lead to a financial crisis for the country as the debt was mostly domestic and China had ample savings.

He said that the debt overhang was a result of previous overheating of the economy.

“This problem is serious and we need to clean house. We need to contain this financial risk, but it will not cause a financial crisis,” he said.

China’s rising debt burden has raised concerns that it could eventually trigger a financial crisis, with government officials acknowledging the challenge but vowing to contain the risks.

Fan said China’s savings rate is 44 percent of GDP, giving it enough of a cushion to deal with the risks, though he added that it would take time for China to stabilize the leverage ratio.

In an interview with Chinese financial magazine Yicai on Sunday, Fan addressed China’s rising trade tensions with the United States, saying the U.S. feels pressure from China’s rise.

Fan said the United States will take measures, which could include a trade war or blocking Chinese investment in the country, to contain China’s rapid development.

On Sunday, a government researcher told the Boao forum that China was unlikely to sell off its holdings of U.S. Treasury bonds on a large scale as a tactic in its trade dispute with the United States.

“On whether China will reduce its foreign exchange reserves, how policymakers think, I don’t know. I personally believe this possibility is very small,” Zhang said.

China held around $1.17 trillion of Treasuries as of the end of January, making it the largest of America’s foreign creditors and the No. 2 overall owner of U.S. government bonds after the Federal Reserve.

A Chinese vice finance minister said last week that China is a responsible investor of its foreign exchange reserves and that it follows market rules in investing its reserves.

China’s foreign exchange reserves, the world’s largest, rose slightly in March to $3.143 trillion, central bank data showed on Sunday.

South China Morning Post

China should make better use of the country’s funds by looking to invest its large capital reserves in real assets, not United States Treasury bonds, an adviser to China’s central bank said on Monday.

“We are a low-income country, but we are a high-wealth country ... We should make better use of the capital. Rather than investing in US government debt, it’s better to invest in some real assets,” Fan Gang, director of the National Economic Research Institute and a member of the People’s Bank of China’s Monetary Policy Committee, said.

Fan, speaking at the Boao Forum for Asia in southern Chinese province of Hainan, also said China’s debt load was a serious problem but that it would not lead to a financial crisis for the country because the debt was mostly domestic and China had ample savings.

He said the debt overhang was a result of previous overheating of the economy.

“This problem is serious and we need to clean house. We need to contain this financial risk, but it will not cause a financial crisis,” he said.
China’s rising debt burden has raised concerns that it could eventually trigger a financial crisis, with government officials acknowledging the challenge but vowing to contain the risks.

Fan said China’s savings rate was 44 per cent of GDP, giving it enough of a cushion to deal with the risks, though he added that it would take time for China to stabilise the leverage ratio.

In an interview with Chinese financial magazine Yicai on Sunday, Fan addressed China’s rising trade tensions with the United States, saying the US feels pressure from China’s rise.

Fan said the United States would take measures, which could include a trade war or blocking Chinese investment in the country, to contain China’s rapid development.

On Sunday, a government researcher told the Boao Forum that China was unlikely to sell off its holdings of US Treasury bonds on a large scale as a tactic in its trade dispute with the US.

“On whether China will reduce its foreign exchange reserves, how policymakers think, I don’t know. I personally believe this possibility is very small,” Zhang said.

China held around US$1.17 trillion of Treasuries as of the end of January, making it the largest of America’s foreign creditors and the No 2 overall owner of US government bonds after the US Federal Reserve.

A Chinese vice finance minister said last week that China was a responsible investor of its foreign exchange reserves and that it followed market rules in investing its reserves.

China’s foreign exchange reserves, the world’s largest, rose slightly in March to US$3.143 trillion, central bank data showed on Sunday.

This article appeared in the South China Morning Post print edition as: Forgo US bonds for real assets, bank adviser says.

Ecns.cn

China capable of handling challenges including possible market fluctuations

Sino-U.S. trade conflicts will never constrain China's efforts to push forward economic structural reforms, economists said on Monday at the Boao Forum for Asia in Hainan province.

Last week's tit-for-tat moves between China and the U.S. are a reflection of fundamentally unbalanced economic development, and China should focus on its long-term interests, sustainable growth, restructuring and further opening up, Fan Gang, director of the National Economic Research Institute, told China Daily in an exclusive interview during the forum.

With the opening-up experience in the past decades, China is in a stronger position to deal with risks including possible market fluctuations caused by trade conflicts, "and that means we can open further", said Fan.

President Xi Jinping will provide a new policy blueprint on Tuesday at Boao, when participants gathering in the coastal city are expecting to hear of more opening-up and reform measures that the country will take.

China's economy has hit the bottom of the so-called L-shape growth trend, according to Fan, although an immediate rebound is less likely. "We are in a process of bumping at the bottom, a normal process of the economic cycle, which can be seen as an opportunity to fix China's own problems, such as overcapacity and financial risks, then we can have a better growth in the next stage", he said.

The country's potential economic growth rate could be between 5 to 6 percent in the coming years, mainly driven by domestic consumption rather than depending on exports or investment, former central bank governor Dai Xianglong said at the forum on Monday.

Closing more indebted manufacturers with overcapacity is inevitable during the economic restructuring and quality-upgrading process, pushing debt risk management, especially for non-financial enterprises, to be one of the policymakers' priorities, said Dai.

He suggested launching specific laws on debt restructuring as soon as possible. "I have confidence on taking market-oriented measures to tackle debt risks."

The former central bank governor stressed the debt-to-equity swap program and more capital injection from the government.

Given the less-developed financial sector compared with the globally advanced level, Dai called for the strengthening of Chinese securities companies, a way to enhance direct financing and facilitate deleveraging. He also suggested to continue encouraging institutional investors and optimizing a multi-level capital market structure.

Zhang Yuyan, director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said at the forum that China proceeds with opening up measures at its own pace, which will benefit the regional economy in Asia, especially neighboring countries, although other potential risks may emerge in Asia, including the tightening of major economies' monetary policy.