Global financial firms are increasingly redirecting their Asia-Pacific expansion strategies towards South Korea while adopting a more cautious approach to China and India, according to a new industry survey reported by Reuters.
The survey, conducted by the Asia Securities Industry & Financial Markets Association (ASIFMA) in partnership with consultancy KPMG, found that firms are focusing on expanding existing businesses and broadening product offerings in a smaller number of key markets rather than pursuing widespread regional growth.
Among the 34 firms surveyed, nearly two-thirds said they plan to expand their Asia-Pacific operations over the next three years. Singapore, Hong Kong, South Korea, China, Japan, India and Taiwan together account for around half of the expansion interest among respondents.
According to Reuters, ASIFMA said competition among Asian financial centres has intensified significantly in recent years. While China was once the dominant destination for foreign capital, several markets across the region are now competing more aggressively to attract global financial flows.
Singapore continues to retain strong appeal due to its geopolitical neutrality and diversified positioning, ASIFMA noted. The city-state's ability to maintain balanced relationships with major global powers and regional blocs has helped sustain investor interest.
South Korea emerged as one of the biggest gainers in the survey. Expansion interest in the country rose sharply to around 50% of respondents, more than doubling from 21% a year ago. Reuters reported that improving sentiment extends beyond equities, with expectations of stronger bond market activity supported by the government's roadmap for inclusion in the FTSE World Government Bond Index (WGBI).
In contrast, firms are taking a more measured view of Asia's two largest markets—China and India.
According to Reuters, concerns surrounding China are largely driven by geopolitical tensions, regulatory uncertainty, capital controls and data governance rules. Interest in expanding operations in China has stabilised at about 40% of respondents, remaining well below earlier peaks. The survey also found that enthusiasm for increasing onshore exposure to mainland China continues to decline as firms reassess their long-term strategies.
India continues to offer significant commercial opportunities, but respondents cited regulatory complexity and operational hurdles as key challenges. Reuters reported that although India has improved its ranking for ease of doing business, firms believe regulatory conditions have become more demanding.
ASIFMA noted that while Indian authorities are working to simplify procedures, issues such as know-your-customer (KYC) requirements and restrictions related to non-deliverable forwards continue to create operational challenges for international financial institutions. As a result, firms' appetite for expansion in India has moderated from previous highs.
The survey highlights a broader shift in regional investment strategies, with global financial institutions becoming increasingly selective about where they deploy capital and resources, favouring markets that offer regulatory clarity, stable policy environments and expanding capital market opportunities.
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