Latin American cities are destined to be the financial centres, according to a recent article in the Financial Times by Charles Piggot. In his piece, bankers rate the following cities for the potential to be financial hubs:
1. Sao Paulo.
5. Hong Kong
Brazil Is More Than Commodities
While known for its natural resources, Brazil has a $1 trillion mutual fund industry. Sao Paulo is viewed as the logical regional hub for South America. Chile is also very strong in financial services, too.
Chile Moving Forward In Finance
Although only having $17 million people and $30 billion in assets compared to the 190 million for Brazil, Chile expects to increase its assets under management by 250% over the next decade. Off that amount, 40% is expected to originate from foreign sources.
Freer Flow Of Capital
Stock markets in Chile, Colombia and Peru are linking up operations. That will improve liquidity, efficiency, and operations overall. Chile is moving to be more attractive from having fewer taxes, a smaller bureaucracy, and less capital controls than Brazil. In addition, rental prices in Sao Paolo are very high, too.
Argentina Makes Everyone In Region Look Better
While the travails in Argentina are hurting Latin America in the short term, over the long term it will help Chile and other countries. Investors will return to the region, but there will be a premium for doing business in Argentina. That will only serve to make Chile and Colombia look more attractive.
Money Never Sleeps
Money flows to where it is treated best. Latin America will lure more financial business due to the growth in the region. In addition, it is located very close to offshore banking centers in the Cayman Islands, Panama and other areas. If Chile and others can make banking a profitable activity, the region will grow to challenge Asia and other areas as a global banking hub.