Michael Bloomberg, the mayor of New York City together with New York Senator Chuck Schumer today expressed their concerns on the possibility of New York losing its position as the world’s leading financial center. According to a study done by McKinsey, New York could lose up to 7 per cent of its market share, equivalent to 60,000 jobs, over the next five years. Unless the U.S. government implement legal & regulatory reforms to prevent the declining share of global capital markets activity – reported Financial Times.

The study which comprises interviews with 50 financial services chief executives concluded that New York had become less attractive than London over the past three years, and the trend might continues. While London’s financial services employment rose 4.3% to 318,000 during the 2003 to 2005 three years period, New York fell by 0.7% to 328,000.

Besides London, Asia capital market is eating up New York’s pie too. Earlier in my website titled “Hong Kong beats New York for Second Place” the World Federation of Exchanges reported that in 2006, Hong Kong surged past New York ($33.61 billion raised) as the world’s second most popular place to float new stock listings raking in US$39.57 billion in IPOs behind London ($48.92 billion raised). And we have not take Shanghai into consideration yet.

Amongst the immediate measures suggested in tackling the problems:

• clearer guidance on the Sarbanes-Oxley (major bottleneck)
• securities litigation reform
• promoting the convergence of accounting standards
• easing visa restrictions on foreign professionals

Chuck Prince, chief executive of Citigroup Inc (NYSE: C, stock), recently forecast continued “diffusion away from New York”, when the Citigroup’s corporate and investment bank fourth quarter earning in 2006 shows Europe and Asia out-performed the US for the first time.

In the competitive global financial market, whoever can provide the platform which is fast, easy yet simple will win the businesses. That’s the formula for success in the world of globalization. And I think U.S. authorities should start acting fast if it’s serious about polishing the weakling shine. Already, Singapore has recognize the threat within Asia region itself when Minister Mentor Lee Kuan Yew announced last Saturday, Jan-20-2007, that Singapore’s corporate tax rate would be cut by at least one percentage point from the present 20 percent at the upcoming Budget in mid-February. What do you think the Government of Malaysia will do next to compete (if they’re awake)?

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• Hong Kong beats New York for Second Place

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January 22nd, 2007 by financetwitter

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