There is no particular reason why America's move toward authoritarianism should hurt the markets.
- Headlines about rampant state-sponsored violence and the militarization of the capital city would raise few eyebrows in Russia or China or Turkey, all of which are home to robust financial centers.
Why it matters: Capitalism won the Cold War. Free countries with free markets could and did outspend Communist dictatorships; Russia and China ended up embracing capitalism as the only way to retain their global power and influence.
- Free markets don't mean free people, however. As Russian economist Vladimir Mau told WSJ's Mark Whitehouse in 1999: "Democracy needs capitalism, but capitalism does not need democracy."
The bottom line: Capitalism is amoral. It cares not about human rights and freedoms — or even much about human lives, beyond their affiliated cashflows.
By the numbers: U.K.-based think tank Z/Yen has been calculating the strength of international financial centers using a consistent methodology twice a year since 2007.
- The index has a broad range of inputs, including such things as corruption perceptions, labor market flexibility, political stability, tax competitiveness, infrastructure quality, cultural diversity, and much more. The all-time top score was the 807 points awarded to London in March 2013.
London and New York have always held the top two places, but their lead over the rest of the pack has diminished greatly over the 13 years since the index was launched.
- In 2007, there were only two cities — New York and Hong Kong — within 100 points of the leader, London. Today, there are 47 cities within 100 points of the current leader, New York. They include Calgary, Guangzhou, and Casablanca, which has become the main center for sustainable energy finance in Africa.
- Moscow now has a rating of 644 points, which would have put it in seventh place in 2007, between Frankfurt and Sydney.
- Istanbul is not far behind, with 636 points.
- Shanghai boasts 740 points, putting it in fourth place globally. China has three of the top seven financial markets in the world, while no other country has more than one.
What they're saying: "Unrest generally has a small but measurable impact on competitiveness," says Z/Yen head of indices Mike Wardle. Hong Kong in particular is notable for remaining one of the strongest financial centers in the world, even after a full year of tear gas and violent protest.
- Hong Kong is facing its worst recession ever, largely as a result of the protests. Still, "you're not seeing large outflows of businesses from Hong Kong," says Wardle. "There does not seem to have been the drain of resources that people feared."
Driving the news: Hongkongers are set to lose many important freedoms in the wake of the passage in Beijing of a sweeping new security law. The territory's special trade status with the U.S. is now imperiled. But none of that is likely to hurt Hong Kong's status as a key financial center.
- China has made it clear that Hong Kong will retain its freely convertible currency and its openness to foreign capital and foreign talent.
- The most storied financial institution in Hong Kong, HSBC, has come out in favor of the new law, which has effectively criminalized the annual Tiananmen Square remembrance that took place this week.
- Our thought bubble, from Axios China's Bethany Allen-Ebrahimian: The whole point of the national security law is to absolutely crush the protests. Without those protests, business will pick up again. Hong Kong won't be as free as it was before, but life will still be good. As long as you shut up about politics.
Hong Kong's fate puts the U.S. protests in perspective.
- Global financial services professionals continue to covet Hong Kong as a plum posting, the riots and human-rights violations notwithstanding. If tear gas doesn't faze bankers in Hong Kong, looting in Soho won't give them much pause in New York.