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PricewaterhouseCoopers (PwC) has issued a report on various top global industry clusters expected by 2040, in which it discloses that Singapore is expected to beat Hong Kong in the asset management sector.
PwC expects “to see a general shift of the world’s largest clusters from developed to emerging and developing nations as the centre of global economic gravity continues to shift towards these countries.”
It believes that “the large increase in the share of world gross domestic product represented by Asia over the next 30 years, helped by the expected rapid growth of economies such as China and India, should aid the development of dominant clusters in the region.” However, it adds that “the top locations within Asia of some of these clusters have not yet come to light.”
It forecasts that “the existing large clusters in New York, London and Boston will be joined by Singapore, which may become the leading cluster in the Asian region. Tighter regulation and higher taxes are currently working against clusters in the United States and Europe but the key factor will be the increase in public and private capital available in Asia – which will fuel growth in asset management in the region.”
In its analysis, it expects the existing asset management clusters of Hong Kong and Singapore to both grow rapidly. It says that “both locations offer less burdensome tax regimes than their western counterparts and have ‘well-regulated but moderate’ regulatory structures.”
However, in its view, “there can only be one dominant regional centre in Asia. This is because of the enormous benefits accruing from knowledge spillovers and labour force specialisation in this industry. At present, we see the competition to be the regional asset management centre between Hong Kong and Singapore.”
“In the first half of 2010,” it says, “Hong Kong out-performed Singapore in attracting start up asset management funds with 65% of Asian fund launches during the period occurring in Hong Kong. However, with the Singaporean government actively promoting the city as a global centre for asset management and with a higher existing value of assets under management, Singapore is well-placed to compete with Hong Kong going forward.”
It concludes that “while Hong Kong’s proximity to China allows it access to the growing Chinese market, it will also be competing with other financial centres within China, such as Beijing, for a majority share of the Chinese asset management market. As a more independent cluster in close proximity to Indonesia, Malaysia and Thailand, we expect Singapore to attract the internationally footloose capital and become the second largest global asset management cluster by 2025.”
Therefore, by 2040, “the three largest clusters by value of assets under management are projected to be New York, Singapore and London. Despite growth in Asian markets, New York is projected to retain its position as the dominant asset management cluster.”A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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