S’pore pips London as No 2 financial hub

New York stays clear favourite in global survey of investor choice

SINGAPORE has emerged as the second leading global financial centre after New York.

While New York has withstood the worst economic crisis in seven decades, London slipped behind Singapore as investors’ preferred place for doing business, according to a global survey.

Some 29 per cent of respondents in the quarterly Bloomberg Global Poll of investors, traders and analysts say that New York will be the best place for financial services two years from now. ‘Despite the carnage of 2008, I still expect the ‘new new’ thing in financial services to be developed and nurtured here (New York), and ultimately exported to the world,’ says Peter Rup, a fund manager at Artemis Wealth Advisors in New York.

Singapore is chosen by 17 per cent of the respondents and London is the pick of 16 per cent. Shanghai has 11 per cent. Tokyo, once considered a global hub, gets the nod from just one per cent.

On a separate question, respondents say that China, Brazil and India offer investors the best opportunities for making money. The US, Europe and Japan are seen to have less potential.

The ascent of Singapore and the decline of London reflect the rise of specialised financial centres that cater to specific segments of the industry.

Many hedge funds have left London because of a new top income-tax rate of 50 per cent for higher earnings and regulations planned by the European Union that restrict the amount they can borrow.

Consulting firm Kinetic Partners says that it had helped 23 hedge-fund firms move to Switzerland from London in the past 18 months and is looking to relocate another 15 since the UK announced a higher tax rate in April.

‘About 20 per cent of the hedge-fund community could leave the UK in the next two or three years,’ says London-based David Butler, a founder of Kinetic. ‘The feeling among the hedge-fund community is there is a better place to be.’

Singapore and Shanghai are growing in popularity as firms look for ways to tap the wealth that has accumulated in China and the rest of Asia. Private wealth management, in particular, is growing in Singapore, which has no capital-gains tax.

‘Everything in Singapore is so well organised. Everything is so efficient. Everything works,’ says Gary Addison, a partner at the private-equity firm Actis Capital, which has US$2.9 billion under management. Mr Addison worked in London, then Tokyo, before moving to Singapore two years ago.

The investment climate attracts firms seeking high returns. ‘I perceive Singapore to be a little more of the tawdry wild west, or I guess tawdry wild ‘east’,’ says Pacific Income Advisors in Santa Monica, California.

Shanghai isn’t as well established as Singapore. Some 11 per cent of those polled see the city as the top financial centre because of the huge growth potential in China. As credit remains tight in the US, China will try to unleash the excess savings of its citizens, says Anthony Comorat at Lydian Trust Co in Palm Beach, Florida.

Dubai remains a popular regional financial centre for investors who want to take advantage of the oil wealth in the Middle East. The sheikdom is the preferred locale of 5 per cent of those polled.

‘No one can compete with Dubai in terms of a place to live and work,’ says Paul Reynolds, head of debt and equity advisory for the Middle East at NM Rothschild & Sons, in Dubai.

Source : Business Times – 31 Oct 2009