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Opinion | How Tokyo Could Overtake Hong Kong As Asia's Financial Capital

Tanzeel Akhtar

This column does not necessarily reflect the opinion of the Benzinga editorial board.

As the unrest in Hong Kong continues to escalate, investors are eyeing up an alternative financial capital in Asia, which is Tokyo - a city that is considered a bastion of stability in the region and is vying for the number one spot. 

Since 2016 protests have gripped Hong Kong which were sparked by highly controversial legislation and tensions have only escalated. Today Tokyo and Singapore are both presenting themselves as safer and more attractive alternatives to Hong Kong.

The yen, which is the official currency of Japan, is also the most-traded currency after the U.S. Dollar and the Euro. Japan is also the third-largest economy in the world, and right now the Japanese market is considered cheap.

Bloomberg opinion columnist David Fickling highlights Tokyo is the home to the largest pool of pension assets after the U.S. and measures up to China and Hong Kong on key measures of financial-market size.

Tokyo Is Openly Making A Grab For Business

As the Hong Kong situation escalates Japan is actively making a grab for business.

The Financial Times recently reported the Tokyo government has been embarking on a bid to woo hedge funds away from crisis-hit Hong Kong, dispatching a delegation to the city on a 48-hour mission to persuade money managers to relocate to the Japanese capital. According to the report the government officials have organised a flurry of meetings between finance executives from Japan and dozens of Hong Kong hedge funds in an effort that has the unofficial but explicit blessing of Tokyo governor Yuriko Koike.

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Governor Koike is actively pushing the city in the spotlight and says the government is welcoming more foreign investment. During a press conference last week she highlighted Tokyo as a global city and says she is keen to restore Tokyo as the number one financial hub. She informed press that Tokyo is openly and vigorously accelerating efforts to attract more business to Tokyo.

Koike also highlighted the city’s initiative involving Environmental, Social, and Governance (ESG) investments and discussed Tokyo’s fund which is encouraging investment into renewable energy and contribute to society. She added the government held events in Paris this July and Hong Kong in August to attract more business.

Japan’s Strong Investment Ties To Norway

Another interesting fact is that Japan’s Rheos Capital Works, which is Asia's largest mutual fund with $7.8 billion in assets under management, has strong ties with Norway.

Rheos Capital Works co-founder Mitsuhiro Yuasa highlighted at a recent press conference the group has a mandate with one of the largest money managers in the world - Norges Bank which is the central bank of Norway also manages the Government Pension Fund of Norway.

Yuasa said that Rheos has worked with Norway's Sovereign Wealth Fund for over 10 years now.

Does Tokyo Have Potential To Overtake Hong Kong?

Japan has a reputation as a safe haven and the potential to overtake Hong Kong. The country also has a number of issues such as an ageing population.

Prime Minister Shinzo Abe is also coming under criticism for his economic policies - Abenomics has involved increasing the nation's money supply, boosting government spending.

Currently Tokyo is doing what it can to open up and become the number one go-to city and financial hub located in Asia - its recent move to to entice foreign investors during the Hong Kong riots is an excellent move and has not gone unnoticed.

Photo supplied by the Tokyo Metropolitan Government.

Tanzeel Akhtar is a global reporter for Benzinga. She can be reached at tanzeel@benzinga.com

Have a thought? Email Benzinga Opinion Editors at SteveKrause@benzinga.com and Catherine@benzinga.com

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