Hong Kong and New York have been battling for IPOs in a global scale, and Hong Kong is losing its battle. Jack Ma criticised Hong Kong for outdated stock listing practice and lists its company in New York's Nasdaq. Why is IPO listing so important for these cities marking themselves as financial centres?
More IPOs can bring more companies to list their shares in their stock markets and more companies listing their stocks can bring more financial resources and human capitals. This is a multiplier effect that stimulate the development of these financial centre cities. Moreover, as the modern technology has been developed so fast that communication around the world becomes very fast and easy, the necessities of having so many financial cities become very weaker now. Therefore, these financial cities, including London, Hong Kong, Shanghai, Tokyo, New York, are battling for more resources from their rivalries; otherwise, the resources will become more concentrating in one city.
The current fear of a deglobalisation process will slow down the process of concentrating resources in one place. Therefore, these cities will have more time to prepare for the future competition for more IPOs, more resources and more clients. While in a deglobalisation environment, the large companies need to have multiple financial bases to refinance themselves around the world, as the cross border financing is more expensive than financing locally. Then there is a need to have multiple financial centres around the world.
Based on these factors, in the near future, the current financial centres will not lose their importance; however, in a longer period, the resources will become more concentrated and the number of financial centre cities will decrease.
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