New York has overtaken London as the world’s leading financial center and its status will only decline in coming years, according to a survey of senior financial services executives commissioned by Kinetic Partners.

New York has overtaken London as the world’s
leading financial center and its status will only decline in coming years, according to a survey of senior financial services executives commissioned by
Kinetic Partners.

London’s influence is expected to decline, the survey
revealed; only a quarter of banking, asset management and hedge funds leaders
now think that London will still be a contender for the world’s pre-eminent
global financial center in five years’ time.

The survey for the financial services firm Kinetic Partners’
2014 Global Regulatory Outlook report saw the amount of financial services executives
considering London
the leading financial center drop to 40 per cent, down from 65 per cent in the
same survey last year.

Conversely, New
York is moving up, with 49 per cent preferring it as
the world’s key financial center, up from 31 per cent a year ago. Looking
forward, 40 per cent of survey respondents still expect New York to
lead the finance world in 2018, but just 26 per cent think the same of London, down from 41 per
cent last year.

There are key reasons for New York’s sudden intake on the financial
services market, the firm said, noting that recent regulatory changes and the
way these have been handled in the different financial centers is an important
factor.

“Despite all the turbulence in global financial markets over
the past five years, New York
continues to host institutions who are focused on building strong returns for
investors. Whilst new regulations have been debated and enacted in many cases,
the industry has largely adapted, and confidence appears strong in New York,” said Kinetic’s regulatory lead in New York, Chris
Lombardy.

The survey also revealed frustration
with regulators’ efforts when it comes to stabilizing the financial system,
protecting investors, reacting to public opinion and creating a framework for
growth. Almost half of those questioned believe that no regulator anywhere has
struck the right balance between these competing priorities.

Curiously, the report also showed that eastern contenders
like Hong Kong and Singapore
are gaining ground. One in ten respondents named Hong Kong
as the leading center in five years, compared with 3 per cent who believe that
it leads today. There was some optimism about Singapore as well, with 6 per cent
marking it for future leadership, against 1 per cent today. Shanghai, however, clearly attracts the most
attention.

“The emergence of Shanghai
as a future global financial center is a major theme in this years’ survey.
Given that China also has financial expertise centerd in Hong Kong, as well as
a fast growing, but lesser known, financial services center in Shenzen, if
China’s model proves successful it will be copied in similar center. As such,
rising competition for markets such as London
is only going to grow,” said Julian Korek, chief executive and founding member
of Kinetic Partners.

When asked to name the leading emerging financial center in
2018, almost half the respondents named Shanghai,
while just 7 per cent mention Dubai and Sao Paulo, the second
most popular choices.