Will Shanghai Replace Hong Kong As Asia’s Financial Center?

The author is ANZ (The Australia and New Zealand Banking Group) Research

With Yuan convertibility, Shanghai will likely be an international financial center. Since the Yangtze River Delta contribute to a sizable 17.6% of China’s GDP, Shanghai may surpass Hong Kong and other offshore RMB centers in terms of prominence.

But we think immediate threat is unlikely.

Shipments of the four bonded zones in Waigaoqiao, Yangshan Port and Pudong Airport add up to an average monthly trade of RMB55 billion or just 2.8% of China’s total.

Even if they are all settled in RMB, the total size will just be roughly one-fifth of the average trade settlement in Hong Kong. There is still time for other places to lead in the near-term.

While the rise of the U.S.’ super economic power has backed Wall Street’s ascent in the Anglo-Saxon world., London still represents 41% of global foreign exchange turnover.

Likewise, the liberalization of China’s capital accounts will mean more opportunities for the offshore market.

(The article has been edited for clarity)