Global financial institutions are recalibrating their expansion strategies within the Asia-Pacific region, with a notable shift in favor of South Korea and a more tempered approach toward major economies like China and India. This realignment comes as firms seek to optimize their market presence by scaling existing operations and broadening product lines across a narrower selection of jurisdictions.
The insights stem from a joint survey conducted by the Asia Securities Industry & Financial Markets Association (ASIFMA) and consultancy firm KPMG. Among the 34 financial firms responding, approximately two-thirds intend to grow their Asia-Pacific business over the next three years. Interest is heavily concentrated in Singapore, Hong Kong, South Korea, China, Japan, India, and Taiwan, which collectively draw about half of the total expansion interest from these institutions.
Peter Stein, Chief Executive of ASIFMA, highlighted the intensifying competition within the region. He noted a significant departure from the landscape five years ago, when China was the primary destination for foreign capital. Today, a wider array of Asian nations is actively competing for a share of Tier-1 global financial flows. This competitive environment is reshaping strategic priorities for global firms.
Singapore continues to maintain its strong appeal due to its strategic multipolar geopolitical positioning. The association noted that Singapore’s neutrality—remaining untied to China, the United States, or any single ASEAN bloc—provides a stable environment for financial activities.
South Korea has emerged as a primary beneficiary of this shifting interest. Expansion interest in the country has surged to approximately 50% of respondents, a substantial increase from 21% reported a year earlier. Stein observed that South Korea has historically been undervalued, but market sentiment has turned extremely positive. This optimism extends beyond equities, with a clear expectation of heightened activity in the bond market. These developments are supported by the South Korean government’s strategic roadmap toward inclusion in the Bloomberg Barclays Global Aggregate Bond Index.
Conversely, Asia’s two largest markets are facing a more cautious reception from investors. In China, the primary concerns revolve around geopolitical tensions and regulatory uncertainties. Meanwhile, in India, apprehensions are largely driven by local regulatory frameworks and operational frictions. Although firms acknowledge the commercial potential within these vast markets, they view complex regulatory environments as significant challenges.
India has made progress in ease-of-doing-business rankings, climbing to fifth place from eighth. However, despite this improvement, regulatory conditions have become more difficult in practice. Firms’ appetite to expand in India has cooled from previous highs. While authorities have expressed intentions to simplify processes, persistent difficulties remain, particularly concerning know-your-customer standards and restrictions on non-deliverable forwards.
In China, expansion interest has stabilized at around 40%, down from earlier peaks. Firms are carefully weighing risks associated with capital controls, data rules, and geopolitical exposure. Onshoring trends on the Chinese mainland continue to show a downward drift, as firms remain uncertain about their long-term exposure to the market.