Global Financial Firms Shift Asia Expansion Focus to South Korea as China, India Face Caution

Global financial firms are increasingly directing their Asia-Pacific expansion plans toward South Korea while taking a more cautious approach to China and India, according to a new survey by the Asia Securities Industry & Financial Markets Association (ASIFMA) and consulting firm KPMG.

The survey, which gathered responses from 34 financial institutions, found that nearly two-thirds of participants expect to expand their Asia-Pacific operations over the next three years. Singapore, Hong Kong, South Korea, China, Japan, India, and Taiwan remain the region’s primary investment destinations, collectively attracting about half of firms’ expansion interest.

ASIFMA Chief Executive Peter Stein said competition among Asian financial hubs has intensified. While China previously dominated as the preferred destination for foreign capital, several regional markets are now competing more aggressively for global investment flows.

South Korea emerged as one of the biggest gainers in investor interest. Around 50% of respondents identified the country as an expansion target, more than doubling from 21% recorded a year ago. Stein said South Korea had long been undervalued but is now attracting stronger confidence across multiple asset classes, including equities and fixed income.

He added that expectations for increased bond market activity have improved, supported by the government's roadmap toward inclusion in the FTSE World Government Bond Index (WGBI), a move that could attract additional foreign capital.

Singapore also continues to rank among the most attractive financial hubs due to its geopolitical neutrality. ASIFMA noted that the city-state's position outside the influence of any single major power or regional bloc has strengthened its appeal to global financial institutions.

Despite remaining major markets, China and India are prompting a more measured investment strategy. In China, firms continue to cite geopolitical tensions, regulatory uncertainty, capital controls, and stricter data regulations as key concerns. Interest in expanding operations there has stabilized at around 40%, significantly below previous highs.

The report also noted that companies remain cautious about increasing their long-term onshore exposure in mainland China as uncertainty surrounding the business environment persists.

India continues to offer strong commercial opportunities, but firms reported growing challenges related to regulatory compliance and operational complexity. Although the country has improved from eighth to fifth place in ease-of-doing-business rankings, respondents said expansion enthusiasm has cooled compared with previous years.

According to ASIFMA, Indian authorities are working to simplify business procedures, but obstacles such as stringent know-your-customer (KYC) requirements and restrictions on non-deliverable forwards continue to complicate market entry and expansion for international firms.

The findings highlight a broader shift in Asia-Pacific financial strategy, with global institutions diversifying their regional investments and prioritizing markets that offer regulatory clarity, stable policy environments, and long-term growth opportunities. South Korea and Singapore are increasingly benefiting from this trend, while China and India remain important but more challenging destinations for international financial firms.