This isn’t true. Hong Kong is plenty sophisticated, and as far as derivatives sales go, it’s as big as London and probably bigger than New York.

One curious thing is that as far as complex derivatives go, London is a far bigger market than NYC since in the United States most complex derivatives are not available for retail sale in contrast to HK or London. London, HK, and Shanghai are much more opaque than NYC is.

The conclusion that I draw from this is that transparency is an overrated virtue when it comes to stopping a financial crisis, which is also way I’m less concerned at keeping track of what SWF’s are doing, since I don’t think it matters that much in the grand scheme of things.

The big battle is between Shanghai/HK and Singapore. Singapore is closer to the Middle East which means that there is more overlap in time zones.

http://www.cnbc.com/id/30694823

On Tuesday, Bank of America sold about $7.3 billion worth of Hong Kong listed shares in China Construction Bank to a group of investors, a source said on Tuesday, as the struggling U.S. bank seeks to raise cash.

Bank of America offloaded $2.83 billion worth of shares in Construction Bank in January at 12 percent below the Chinese bank’s last trading price.

That same month, Royal Bank of Scotland sold a $2.4 billion stake in Bank of China at a 7.6 percent discount.

http://www.oecd.org/dataoecd/8/58/42719905.pdf

Would the leading indicators be foretelling a leveling of resources and their allocation?

New York and London will be nursing serious wounds for years. In both cases, budget deficits will be gigantic, resulting in higher taxes and cutbacks in public investment in the kind of services – transportation, education, even culture – that attract talent. In each city we can expect a big increase in financial regulation, not to mention ad hoc government interventions, adding to the cost and unpredictability of doing business. Controversies about financial remuneration will cause many professionals to seek other types of employment.

The status of New York will also be undercut by the emergence of another big financial centre on the east coast: Washington DC, now the world’s largest sovereign wealth fund and soon to be the epicentre of world financial regulatory reform. The increased intermingling of politics and finance will create new risks in the US financial system. On the other hand, China will be the world’s largest creditor for decades. When Great Britain and the US each held this position, they were the prime global financial centres.

China owns several of the world’s largest banks, all well capitalised. It has a large reservoir of big companies and up-and-coming ones that will be going public on the Hong Kong and Shanghai exchanges. It has a rapidly growing middle class with enormous savings that will encourage the development of a bigger and more sophisticated financial services sector. Its growth rate is still above 6 per cent (compared with negative rates in the US and UK) and it will emerge from the financial crisis far stronger than either America or Britain.

China lacks the sophistication of Wall Street or the City, but given the mess that complex and opaque securities have caused, a simpler system has its virtues. China will need to free up its currency in global markets, but this has been happening as the renminbi has risen 16 per cent against the dollar in the past year and Beijing has recently allowed several countries to hold the renminbi in their reserves.

I see many of these sovereign funds as having traversed a path similar to the Yale or Harvard endowments: from an emphasis on safety to a growing appetite for risk, from a specific set of limited goals to a broader range of initiatives that sit comfortably with each other only when the assets are rising in value.