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Tokyo can become a more competitive global financial centre, some observers say

Panellists say finance is now a growth strategy that can generate high multiplier effect
By Goh Thean Eu   
April 16, 2021

Tokyo has a “genuine chance” to become more competitive as a global financial centre, according to Jesper Koll, senior adviser at US-based fund management firm WisdomTree and veteran Japan analyst, citing “strong political will” in the Japanese capital.

He was speaking at a recent panel discussion at the Foreign Correspondents’ Club of Japan. The panellists, including Tan Lee Hock, publisher of Asia Asset Management, shared their views on whether Tokyo has what it takes to become more competitive as a global financial centre.

“Tokyo Governor Yoriko Koike is really committed to promoting Tokyo not only as the best city in Japan, but also a green, smart, innovative, fun and global city,” Koll said at the April 7 discussion.

He said there is growing recognition among the Japanese that “finance is a growth strategy”.

“Finance is no longer just for greedy bankers. It is a growth strategy. Japan is very much in need for a strategy that promotes jobs that are high paying and high impact, and help allocate the vast savings pool of Japan into better and higher return of investments,” he said.

Koll said developing the finance industry will have a high multiplier effect on the economy. “For every one job you create in finance, it creates three new jobs somewhere else.”

Meanwhile, Tan noted that Tokyo lags behind global asset management centres such as New York, London, Hong Kong, Singapore and Shanghai.

He said a study by UK-based Z/Yen Group puts Tokyo at 14th spot, far behind New York and London which were number one and two, respectively, and also trailing Frankfurt, Luxembourg, Sydney, Zurich, Boston and San Francisco.

China, with the potential of its vast market, is shaping up to offer stiff competition to Tokyo.

According to Tan, global asset management companies are expected to expand their footprint in China and choose Shanghai as their regional headquarters.

“Currently, China’s fund management industry has the fifth largest assets under management in the world; by 2030, it will be the largest globally, given the size of the population and rate of growth in savings,” he said.

He suggested that Tokyo will have to “reinvent itself” and develop its capabilities in new asset classes, such as infrastructure bonds.

“These new capabilities will be the main driver for the asset management industry for the next five to 20 years,” he said.