Tokyo moving up one spot to #19 among Global Financial Centers

The 35th edition of Z/Yen’s Global Financial Centres Index (GFCI) has been published, and after arresting its fall and climbing back one spot into the Top 20 six months ago, Tokyo managed to claw back one more spot to 19th place globally. The point differentials among the Top 20 remain quite small, and so the delta to fifth-place San Francisco has held steady at 15 points.

The GFCI is the longest study of this kind, being published semi-annually and hence having more than 17 years of publication under its belt. The methodology combines 145 quantitative measures provided by third parties including the World Bank, The Economist Intelligence Unit, the OECD, and the UN, with 48,365 assessments of financial centers provided by 8,494 respondents to the GFCI online questionnaire.

From an all-time high third position in March 2020, Tokyo’s fall has been quite dramatic, via 4th place in September 2020 and 7th in March 2021, to ninth place in September 2021 and March 2022. Dropping out of the Top 10 in September 2022, and out of the Top 20 in March 2023, with a slight recovery over the past 12 months.

This also puts Tokyo into the eighth regional regional spot behind Singapore (#3), Hong Kong (#4), Shanghai (#6, one spot up), Seoul (#10, one spot up), Shenzhen (#11, one spot up), and Beijing (#15, two spots down). Sydney, which had fallen behind Tokyo at #22 in the last survey, managed to claw back to #18, gaining four spots. Also, Osaka at #47 has fallen another four ranks after giving up five a year ago.

Additionally, the GFCI assessment also asks respondents which centers they consider will become more significant over the next two to three years, with Seoul (#1), Singapore (#2) and Hong Kong (#4) unchanged at the top, while there is no mention of Tokyo among the fifteen highest ranked cities.

Among the five areas of competitiveness (Business Environment, Human Capital, Infrastructure, Financial Sector Development, Reputational & General), Tokyo lost its ranking for Human Capital, but retains it for Reputational & General (#14, one spot down). Similarly, across the eight industry sector sub-indices (Banking, Investment Management, Insurance, Professional Services, Government & Regulatory, Finance, FinTech, Trading), Tokyo nabs two Top Fifteen rankings, for Banking (#10), Investment Management (#12), Government & Regulatory (#6) and Trading (#7), with the first two being new and therefore indicating an upward trajectory.

The methodology-driven ranking of the GFCI is augmented with financial center profiling that uses clustering and correlation analysis to identify three measures that determine a financial center’s profile along different dimensions of competitiveness (Connectivity, Diversity, Specialty).

The 10 Global Leaders surfaced by this profiling have both broad and deep financial services activities and are connected with many other financial centers. It is noteworthy that there has been quite some movement between categories in this edition (denoted by a “*” following the city name), and it *does* include Tokyo, thus allowing us to keep propagating the “Global Financial City Tokyo” nomer with some honor.

Lastly, alongside the main GFCI index, Z/Yen also analyzes financial centres in terms of their FinTech offering. Unfortunately, Tokyo’s drop here has continued even further, down five spots to 37nd, from 15th in September 2022. While Tokyo’s score increased by 17 points in absolute numbers six months ago, an improvement of 2 points this time around was not enough to keep up with the higher acceleration of its competitors.

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