Active, growing financial markets and innovations in the sector are making Shanghai more prosperous as a financial hub for the world's second-largest economy, a report released on Monday suggests.

The 2013 H1 Shanghai Financial Prosperity Index, released by Roland Berger Strategy Consultants and the Shanghai Financial Association, shows that the city's financial industry is in good shape to grow.

The analysis covers six dimensions of the industry: markets, institutions, internationalization, innovation, talent and environment.

"Financial markets in Shanghai maintained relatively fast development in the first half of 2013 with a booming fund market, gold market and insurance market.

"The financial innovation index also surged, with more financial products designed and the Free Trade Zone approved by the State Council," said Lian Ping, an executive member of the Experts Committee of the Shanghai Financial Association and chief economist of the Bank of Communications Ltd.

Shanghai's financial industry "has become more stable since 2010, and the growth rate of this sector slightly improved in the first half of 2013", the report said.

The report said that Shanghai achieved more progress than other financial centers, including Hong Kong, Singapore, Mumbai, New York, London and Seoul, in the past six years in terms of the "development index".

The index incorporates indicators of financial markets and the development of the financial environment.

"It is not a comparison of absolute value," said David Ye, partner and vice-president of Roland Berger, lead author of the report.

"It is meant to compare how the financial industry is evolving and progressing in these markets. Shanghai achieved more in the past six years, but Singapore, Hong Kong and Mumbai showed a stronger growth trend in the first half of 2013," he added.

The Shanghai Financial Association and Shanghai United Assets and Equity Exchange also released their Shanghai Merger and Acquisition Index report on Monday.

That report said that during the first half of 2013, there was marked growth of merger and acquisition transactions in primary industry.

Private companies were more active in this market than State-owned ones. Outbound M&A cases surged in May and June, and the quality of the deals improved.

Patrick Becker, chief executive officer of Bexuco Ltd, an M&A project consulting and service company based in Shanghai, said that although Chinese companies have become more willing to pursue outbound cases, they still lack the experience and management skills to handle and execute an overseas investment.

This can lead to strategic mistakes, inappropriate deal structures and overpaying for the target firm, he said.

"But I see a substantial improvement in the past 12 months. Chinese companies are more and more willing to engage foreign M&A advisers acting in their interest," he said.

xieyu@chinadaily.com.cn

(China Daily USA 10/22/2013 page15)