Two Australian cities among the worlds 20 top financial centres

17 September 2018 Authored by Consultancy.com.au

Sydney and Melbourne both retain their position in the top 20 of the Global Financial Centres Index, a financial markets competitiveness report released by British research consultancy Z/Yen Partners.

The index, which was developed in conjunction with the China Development Institute since 2016, is updated every September and March. Z/Yen Partners’ Global Financial Centres Index (GFCI) evaluates the competitiveness of 100 financial centres across the globe, from London, New York and Hong Kong through to Panama, Istanbul and Manila – using 137 quantitative measures compiled from leading data sources and over 30,000 financial centre survey assessments.

In respect to the metrics used, which draw from sources such as the World Bank, the OECD, and the UN, the instrumental factors are broken down into the five broader categories of business environment, human capital, infrastructure, financial sector development, and reputation, with further inputs drawn from a range of global consulting firms including A.T. Kearney, Capgemini, Mercer, The Boston Consulting Group, PwC and KPMG.

The ranking was topped by New York, which overtook London after the UK capital struggled through negotiations with Brussels. The next four places were dominated by Asian financial centres Hong Kong, Singapore, Shanghai and Tokyo, indicating that the Asian century is well underway. Sydney placed 7th overall, followed by Beijing and Zurich which made up the rest of the top 10. 

GFCI 24 Ranks And Ratings

Since the beginning of the GFCI a decade and a half ago, Sydney has faired well, consistently maintaining a score of over 600. This year, Sydney scored 734, 10 rating points higher than the previous analysis and moving up two spaces on the index. As a result, Sydney knocked out Toronto and San Fransisco, which both dropped out of the top 10.

The report touches on the turning tides toward Asia from the predominance of Western financial centres of yesteryear. “Centres in the Asia/Pacific region generally rose in the ratings, continuing the trend which has been apparent over several years,” states the report. 

Sydney’s proximity to its four northern neighbours – both geographically and metaphorically on the index – may well have influenced it gaining a foothold as one of the world’s most important financial hubs.

Top Five Asia/Pacific Centres Over Time

Melbourne retained its spot in the top 20 but only marginally, falling from 12th to 20th place in the past six months. Melbourne lost 21 rating points across the board and has been eclipsed by the likes of newcomers Shenzhen, Guangzhou, Dubai and Frankfurt, among others out-performers. Wellington also featured on the index, coming in at a steady 45th place. 

Sydney scored best in the ‘financial sector development’ area of competitiveness, which includes factors such as depth and breadth of industry clusters, and availability of capital and market liquidity. Infrastructure such as built environment, ICT infrastructure and transport infrastructure was also high on Sydney’s list.

Beyond business environment and economic output, the consulting firm also takes into account multiple other criteria which underpins each centre, including quality of life, cultural diversity, sustainable development, level of innovation and city brand/appeal.  

Average Ratings Of The Top Five Centres In Each Region

The report authors note that in the past decade and a half – since the beginning of the GFCI –there has been a significant shift away from Western financial centres toward Asian ones. 

“The long-term trend since our first published edition in 2007 has been the consistent and persistent rise of Asian centres while the press and pundits focus on brief headlines about London and New York City,” Z/Yen’ CEO Michael Mainelli states. “When 60% of an index moves from Western centres to Asian centres in a decade, it is a time for reflection.”

“Financial centres can, and do, control large amounts of their destiny. GFCI 24 shows the wide range of strategy, competition, specialisation, and, may I say, style in which they do it,” Mainelli says in conclusion. 

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