With more than twice as much foreign direct investment (FDI) in 2012 than in 2011, Hong Kong tops the ranking of most attractive international financial centre (IFC) in Asia. A total of $6.12bn was invested in the special administrative region last year across 127 projects, compared to $2.55bn through 67 projects in 2011. Singapore, which topped the ranking in 2011, also recorded an increase in FDI inflows, but its 50% growth in capital investment was not enough to maintain its lead among Asia's financial centres and the city-state slipped to second place with $3.72bn of investment through 94 projects.
China's charm
Ranked third and fourth in terms of FDI inflows are the Chinese cities of Beijing and Shanghai, with $1.72bn and $1.5bn, respectively. China ranked as the most attractive country for FDI inflows in both 2011 and 2012. One example of an investment into China was the $534m joint venture between Spain-based Santander and China Construction Bank. The two lenders will set up a company to provide investment banking services in villages and smaller towns in China. The initial investment in the joint business is of Rmb3.5bn ($562.6m) and Santander will gain a 19.9% stake in the new company.
Other European lenders are also expanding their presence in China. UK-based HSBC and Switzerland's UBS are expanding their local staff and by 2016 they plan to hire 1000 and 600 employees, respectively.
Changing places
If the top inward FDI positions have not changed much between 2011 and 2012, the fortunes of a number of smaller IFCs have indeed changed in the period. Yangon in Myanmar is the highest new entrant in the top 15 Asian centres, in fifth place with $1.35bn and 19 projects. Bangalore (India), Tokyo and Phnom Penh (Cambodia) also climbed up the ranking into the top 15.
An even livelier picture emerges when looking at the Asian financial centres that have generated the largest outward FDI volumes. The Taiwan capital, Taipei, topped the 2011 ranking with $1.57bn and 30 projects, but the city dropped down to fifth in the 2012 ranking. In 2012, it was the South Korean capital Seoul that was the largest source of capital expenditure with outflows of $1.96bn. This was a significant increase since 2011, when outflows from the city amounted to $1.14bn.
Beijing climbed to second place in 2012 from fifth in 2011, while Tokyo slipped to third place from second. Hong Kong leapfrogged from 10th to fourth place.
