New financial centers may emerge amid COVID-19 disruption: APG

The unraveling disruption caused by the novel coronavirus might dent the role of the traditional financial hubs, while surprising candidates are likely to take their place with their own speciallizations in the wake of decentralization playing out due to COVID-19, said APG Asset Management Chief Executive Ronald Wuijster on Tuesday.

Surprising candidates could be Busan in South Korea, Casablanca in Morocco and Malaysia‘s Kuala Lumpur, Wuijster said during a speech at the Jeonbuk International Finance Conference 2020, a teleconference hosted by the National Pension Service, Korea‘s public pension fund.

“The role of the financial centers will be diminished because of the strong recent realization related to the COVID situation,” Wuijster said. “That leads to a lot of activities that can be done from everywhere, and maybe that will make the financial centers less strong.”

Busan, the fifth-busiest port in the world, specializes in maritime finance and derivatives trading. Casablanca could serve as a gateway between Europe and Africa, while Kuala Lumpur has the potential to become a leading financial center for Islamic banking.

Other than the candidates mentioned, any city could play the role of a new financial center with new specializations in the fields of financial technologies, ranging from blockchain to currency trading systems, digital payments and digital lending.

“Leading financial centers could become less leading than today,” Wuijster said. “That would be a surprise, probably not the most likely scenario, but still something we could start to consider.”

Wuijster also stressed the importance of investors’ agility to adapt to the rapid and profound changes due to the impact of COVID-19 around the world. Openness to innovation and the use of fintech, he added, could play a role in investors‘ adaptaion to the fast-changing environment.

To achieve the goal, APG, dedicated to managing Dutch pension funds through a long-term investment strategy, sought to create an open ecosystem involving peers, industry and academia. APG also acquired data analytics firm Entis and established SDI Asset Owner Platform to enable digitalization.

The event marked the third of its kind. NPS made the event a teleconference due to travel restrictions in place. Other speakers during the teleconference included Meritz Asset Management CEO John Lee, Korea University Professor Tomoo Kikuchi and Seoul National University professor Jorg Michael Dostal.

By Son Ji-hyoung (consnow@heraldcorp.com)