(Yicai Global) Aug. 30 -- Shanghai has risen by two slots to become the sixth-biggest global hub of asset management this year, according to a ranking made by a research institute linked to the China-Europe International Business School.

The position shows that Shanghai has built a solid base to turn into an international financial hub and that the eastern megacity has prominent advantages in its competitiveness, the Lujiazui Institute of International Finance of the Shanghai-based business school wrote in the 2022 Global Asset Management Center Index Report published yesterday.

New York is the world's best AM hub while London ranks No. 2, and Boston is No. 3 on the list. Singapore took the fourth spot and China’s Hong Kong Special Administrative Region fifth. Shanghai and Chicago tied for sixth place.

The pandemic has not hurt the sector excessively. The AM sector has the benefit of long cycles and it has been easy to shift to online operations so this has alleviated the short-term impact of the Covid-19 pandemic, said Zhao Xinge, executive deputy director of the institute. Shanghai’s resilience regarding economic growth and its long-term aspirational tendencies have not changed in general, Zhao added.

AM institutions in Shanghai still remain optimistic in the second half of this year even though the recent Covid-19 outbreaks cause economic pressures, according to survey results presented in the report. Some 52 percent of the polled institutions said that Shanghai’s AM business will continue to expand this year.

However, Shanghai has some catching up to do to rise higher in the index. The gap between Shanghai and the two cities of New York and London is mainly caused by supply and business factors, said Jiang Jianqing, director of the CEIBS Lujiazui Institute of International Finance.

The Chinese municipality has fewer practitioners in the industry of financial services, which can partly be explained by the high personal income tax and the relatively small earnings that affect the city's ability to attract foreign talent, Jiang said. The scale of the sector, broken down into market capitalizations, the balance of the bond market, and transaction values of futures and options, is less than half of that of New York. The sizes of leading AM firms and open-end funds in Shanghai are smaller than one-fifth of those in New York.

Meanwhile, London’s leading firms in the sector have assets under management to the tune of more than two times that of Shanghai. The European city's net volume of open-end funds is about 50 percent more than that of the Chinese financial hub.

The gap between Shanghai and Singapore and Hong Kong is mainly about alternative assets. As of March 31, the combined market cap of Singapore’s real estate investment trusts was almost 17 times that of Shanghai. Hong Kong was home to 44 hedge funds, whose total worth surpassed USD1 billion, and only New York and London were bigger in this regard.

Editors: Xu Wei, Emmi Laine, Xiao Yi