Global financial firms are increasingly redirecting their Asia-Pacific expansion strategies toward South Korea while taking a more cautious approach toward China and India, according to a new industry survey reported by Reuters.

The survey, conducted by the Asia Securities Industry and Financial Markets Association (ASIFMA) in partnership with consultancy KPMG, found that companies are focusing on expanding existing businesses and broadening product offerings in a small number of key markets rather than pursuing broader regional growth.

Almost two-thirds of the 34 companies surveyed 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 nearly half of the expansion interest among respondents.

According to Reuters, ASIFMA said competition among Asian financial centers 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 retains strong attractiveness due to its geopolitical neutrality and diversified position, ASIFM noted. The city-state’s ability to maintain balanced relations with major global powers and regional blocs has helped sustain investor interest.

South Korea emerged as the biggest beneficiary in the survey. Interest in expanding into the country rose sharply to nearly 50% of respondents, more than doubling from 21% a year ago. Reuters reported that improving sentiment outperformed 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, companies are overestimating 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 regulations. Interest in expanding operations in China has stabilized at about 40% of respondents, down from previous peaks. The survey also found that enthusiasm for increasing coastal exposure to mainland China continues to wane as companies reevaluate their long-term strategies.

India continues to offer significant business opportunities, but respondents cited regulatory complexity and operational constraints as key challenges. Reuters reported that although India has improved its ranking for ease of doing business, companies believe that regulatory conditions have become more demanding.

ASIFMA noted that while Indian authorities are working to streamline processes, issues such as know-your-customer (KYC) requirements and restrictions related to non-deliverable forwards pose operational challenges for international financial institutions. As a result, companies’ appetite for expansion in India has waned from earlier 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, favoring markets that offer regulatory clarity, a stable policy environment and expanding capital market opportunities.

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