Markets
Shifting Perspectives: The Top Financial Centers in the World
Shifting Perspectives: The World’s Top Financial Centers
Financial centers are catalysts for global growth, with tremendous economic influence.
Historically, the rise of nations has coincided with the emergence of robust financial hubs. From London towering in the 19th century, to New York City gaining dominance in the 20th century, broader economic shifts are at play.
Today’s chart uses data from the Duff & Phelps Global Regulatory Outlook 2020, and it highlights changing perceptions on the world’s financial centers.
In total, 240 senior financial executives were surveyed—we take a look at their responses, as well as key factors that could impact perspectives across the wider financial landscape.
Financial Hubs Today
In the below graphic, you can see the percentage of respondents that voted for each city as the world’s preeminent financial center:
The Status Quo
New York and London are perceived to be at the helm of the financial world today.
New York City is home to the two largest stock exchanges in the world—and altogether, U.S. stock markets account for an impressive 43% of global equities, valued at over $34 trillion. Of course, New York is also home to many of the world’s investment banks, hedge funds, private equity firms, and global credit rating agencies.
Across the pond, the London Stock Exchange has surpassed $5 trillion in market capitalization, and the city has been a global financial hub since the LSE was founded more than 200 years ago.
Together, the United States and the United Kingdom account for 40% of the world’s financial exports. But while New York City and London have a foothold on international finance, other key financial centers have also established themselves.
Rising in the East
Singapore, accounting for 2.1% of the respondents’ vote, is considered the best place to conduct business in the world.
Meanwhile, seventh-ranked Hong Kong is regarded highly for its separation of executive, judiciary, and legislative powers.
Despite ongoing protests—which have resulted in an estimated $4 billion outflow of funds to Singapore—it maintains its status as a vital financial hub globally.
Where are Financial Centers Heading?
A number of core financial hubs are anticipated to underpin the future of finance.
Although New York maintains the top spot, some executives surveyed believe that the top financial center could shift to Shanghai, Singapore, or Hong Kong.
Growth in Asian Hubs
According to survey results, 8.7% of respondents said Shanghai is predicted to be the next global financial hub by 2025. Shanghai houses the largest stock exchange in China, the Shanghai Stock Exchange (SSE), and the SSE Composite tracks the performance of over 1,600 listings with $4.9 trillion in combined market capitalization.
Meanwhile, Singapore accounted for 5.4% of the respondents’ vote. Exporting $27.2 billion in financial services annually, Singapore’s economy has grown at an average clip of 7.7.% per year since the country’s independence, one of the highest growth rates in the world.
The Impending Impact of Brexit
After four tumultuous years, Britain’s departure from Europe took place on January 31, 2020.
Despite a long-awaited victory for the Conservative government, many experts are saying that economic prospects for the region look dim.
We now know that the economy will be between 2—6% smaller in 10 years than it would otherwise have been.
– Ray Burrell, Professor at Brunel University
The UK financial sector could lose over $15 billion (£12B) due to Brexit, and falling investment in the private sector may lead to wage pressure and layoffs.
On the flip side, 51% of UK businesses said that Brexit will be beneficial to business conditions.
A New Paradigm
Although the global financial sector is primarily influenced today by New York City and London, it seems that perceptions are shifting.
While both of these cities will maintain their reputations as massive financial capitals going forward, it’s also clear that hubs such as Singapore, Hong Kong, and Shanghai will be providing some stiff competition for capital.
Markets
3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Valuations are much lower than they were during the dot-com bubble, but what else sets the current AI enthusiasm apart?

3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Artificial intelligence, like the internet during the dot-com bubble, is getting a lot of attention these days. In the second quarter of 2023, 177 S&P 500 companies mentioned “AI” during their earnings call, nearly triple the five-year average.
Not only that, companies that mentioned “AI” saw their stock price rise 13.3% from December 2022 to September 2023, compared to 1.5% for those that didn’t.
In this graphic from New York Life Investments, we look at current market conditions to find out if AI could be the next dot-com bubble.
Comparing the Dot-Com Bubble to Today
In the late 1990s, frenzied optimism for internet-related stocks led to a rapid rise in valuations and an eventual market crash in the early 2000s. By the time the market hit rock bottom, the tech-heavy Nasdaq 100 Index had dropped 82% from its peak.
The growing enthusiasm for AI has some concerned that it could be the next dot-com bubble. But here are three reasons that the current environment is different.
1. Valuations Are Lower
Stock valuations are much lower than they were at the peak of the dot-com bubble. For example, the forward price-to-earnings ratio of the Nasdaq 100 is significantly lower than it was in 2000.
Date | Forward P/E Ratio |
---|---|
March 2000 | 60.1x |
November 2023 | 26.4x |
Lower valuations are an indication that investors are putting more emphasis on earnings and stocks are less at risk of being overvalued.
2. Investors Are More Hesitant
During the dot-com bubble, flows to equity funds increased by 76% from 1999 to 2000.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
1997 | $231B |
1998 | $163B |
1999 | $200B |
2000 | $352B |
2001 | $63B |
2002 | $14B |
Source: Investment Company Institute
In contrast, equity fund flows have been negative in 2022 and 2023.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
2021 | $295B |
2022 | -$54B |
2023* | -$137B |
Source: Investment Company Institute
*2023 data is from January to September.
Based on fund flows, investors appear hesitant of stocks, rather than overly exuberant.
3. Companies Are More Established
Leading up to the internet bubble, the number of technology IPOs increased substantially.
Year | Number of Technology IPOs | Median Age |
---|---|---|
1997 | 174 | 8 |
1998 | 113 | 7 |
1999 | 370 | 4 |
2000 | 261 | 5 |
2001 | 24 | 9 |
2002 | 20 | 9 |
Many of these companies were relatively new and, at the peak of the bubble in 2000, only 14% of them were profitable.
In recent years, there have been far fewer tech IPOs as companies wait for more positive market conditions. And those that have gone public, the median age is much higher.
Year | Number of Technology IPOs | Median Age |
---|---|---|
2020 | 48 | 12 |
2021 | 126 | 12 |
2022 | 6 | 15 |
Ultimately, many of the companies benefitting from AI are established companies that are already publicly traded. New, unproven companies are much less common in public markets.
Navigating Modern Tech Amid Dot-Com Bubble Worries
Valuations, equity flows, and the shortage of tech IPOs all suggest that AI isn’t shaping up to be the next dot-com bubble.
However, risk is still present in the market. For instance, only 33% of tech companies that went public in 2022 were profitable. Investors can help manage their risk by keeping a diversified portfolio rather than choosing individual stocks.

Explore more insights from New York Life Investments.

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