Marcus Cake

My previous article, Could an online social network deliver a virtual Silicon Valley to non-US economies? , I concluded that online social or industry networks could deliver the people and chain reaction that could spawn a new Silicon Valley. Financial centres currently specialises in specific niches. The increased penetration of broadband, the rise of online industry networks and the emergence global capital markets will increase the participation of specific non-US financial centres to unprecedented levels. The successful centres will offer a specific regulatory environment tailored to specific companies in specific industries. They will be supported by dedicated online industry networks.

Investors used to insist that they would only invest in companies incorporated in their home countries. If the could not see the investment and talk to the people, they would not invest. The need for diversification and opportunites for the internet change this. Investors can review the performance of their companies by reviewing the companies own online systems. They can get freelance expertise in the foreign geography. As time passes they will increasingly insist that specific types of companies are incorporated in specific countries. This will be rapidly accelerate as moved beyond only investing in companies in their home country. They are starting to favour incorporation in countries which are supportive of their chosen field of endeavour. They will, ofcourse, need an online network to find the talent required. Investors now have the option to invest in companies incorporated anywhere in the world. They will only do this if the company provides transparency, expertise is available to represent them and solve problems and the offering of the financial centre is compelling. It is likely that some financial centres will become a new Silicon Valley in their specific specialisation. They will acquire the people and chain reaction necessary to deliver increasing success.

Specialisation in financial centres is not new. Jersey and Luxembourg specialises in investment funds. The British Virgin Islands offers quality generic holding companies for ownership of intellectual property and investments. Hong Kong and Singapore offer access to the equity of companies in China. Bermuda leads the world in reinsurance. The Isle of Man is determined to be a home for the worlds ebusiness companies. Dubai aims to build a financial centre equal to London or New York within a generation. Specialisation and the scale of these financial centres will move to a completely new level as large amounts of capital are repatriated from the US capital markets and online networks emerge.

The repatriation of capital from the US over the next five years is a once in a 200 year event. Financial centres will need to determine their strategy and execute unequivocally if they are to secure a niche and be a significant recipient of repatriated funds.