10 Emerging Financial Centers New York and London, the world's current centers of finance, are about to get blindsided.

The financial crisis slammed global banking hubs around the world. Were it not for government bailouts, Wall Street, The City and other banking hubs may never have recovered.

The traditional financial powerhouses stand weakened, and others, long hungry to steal their business, are taking advantage.

Around the world, regional banking centers like Toronto, Shanghai, Singapore and Zurich are poised for explosive growth and to become the new world financial leaders.

Of course, New York, London and other leaders aren't going away anytime soon. But as Western power declines, banks could increasingly favor Hong Kong and Sao Paulo, say, for their operations and investments.

In no particular order, we present the top financial centers to go long on.

1. Toronto
Gunning to be relevant

• Shooting to be a top five financial center
• Actually, they're a (quiet) financial giant
• World leader in mining listings

Toronto's financial sector has traditionally focused more on Canada than the world, but it's trying to change that. The city recently unveiled a plan to become "one of the two leading financial clusters in North America and one of the top five to seven global centres."

At least for the region, Toronto is already a player. According to the Toronto Financial Services Alliance, it's the third largest North American financial services center after New York and Chicago, based on direct employment, and the fastest growing. It's also the hub for Canada's banks, securities firms, insurers and mutual funds.

Toronto's TMX Group is the third largest stock exchange in North America and the eighth largest in the world based on market capitalization; the city is also the world leader in mining sector listings.

According to an October 2009 World Economic Forum global ranking , Canada "demonstrates consistent strength across all three financial intermediation pillars: banking financial services (eighth), non-banking financial services (seventh), and financial markets (12th)."

While perhaps more financially stable than the U.S., the WEF notes the "distortive effects of taxation," ranking Canada just 25th.

2. Luxembourg
Safe and exotic

• Exotic, secretive tax haven
• Increasingly popular for private equity
• Tiny town, looming regulation

Luxembourg is growing as a financial center because of its Swiss-like secrecy rules, but that could be its downfall.

There's plenty to find attractive. Luxembourg's marketing materials claim "it's the second largest investment fund centre in the world after the United States, the premier captive reinsurance market in the European Union and the premier private banking centre in the Eurozone." It's also the second-largest mutual fund market after the U.S.

More than 145 banks are established in Luxembourg from 24 different countries, according to the government; most are subsidiaries and branches of large foreign banks. According to an Ernst & Young survey, Luxembourg is the top destination for private equity firms looking to expand.

A recent KPMG/Dubai study ranked Luxembourg the ninth most competitive financial hub, calling it one of the "leading centres for private banking due to its strict regulations regarding customer privacy."

It adds: "On the capability measurement pillar, Luxembourg performs extremely well on business environment. The strengths in the business environment stem from a strong legal and regulatory framework, easy access to markets, strong corporate governance and institution building."

But the thing that makes Luxembourg attractive--secrecy--could backfire. There's a global crackdown on tax havens and the country is on the OECD's "gray and black list," meaning more international pressure to reform could come and make moving finance operations to the tiny enclave less attractive.

3. Sao Paulo
It's just more fun

• Emerging Latin American leader
• Huge banking sector opportunity
• Legendary nightlife, plus the Olympics and World Cup

As Brazil emerges as Latin America's leading economy, investors are increasingly looking to Sao Paulo to play the country and the region. Brazil's banking sector is relatively underdeveloped and security remains a concern in Sao Paulo, but there's lots of upside.

As the WEF report puts it, "Financial stability is a key contributor to Brazil's ranking of 34th in the overall Index, as the country has exhibited stability across its banking system (25th) through the current crisis; its currency stability (third) is a particular advantage." Plus, "a high degree of IPO activity (fourth) contributes to the country's relatively high scores in non-banking financial services."

Still, there are significant obstacles to become a global financial hub. "Brazil's institutional environment remains relatively weak in areas related to legal and regulatory issues (49th) and contract enforcement (42nd). The country's business environment is dragged down by an inefficient tax collection system (55th), a high cost of doing business (43rd), and less-developed human capital (42nd)."

4. Zurich
No bonus taxes here

• No threat of bonus taxes
• Highly developed financial infrastructure
• Amazing quality of life, but New York or London it ain't

As London's vaunted financial power declines and British regulators go after bonuses, some bankers are fleeing to Switzerland.

Long a financial center known for equity and foreign exchange markets, Zurich does well in international rankings, despite recent banking problems. The KPMG/Dubai report put it this way: "Zurich's traditional strengths are in the asset management and private banking sectors Switzerland's competitiveness has been impacted somewhat by the continuing difficulties experienced by major Swiss banks."

Zurich also features among the top ten on institutional environment, business environment, financial market access and financial markets, and performs exceptionally well on financial stability in the WEF's Financial Development Index.

Still, there are problems. As KPMG notes, "Zurich is expected to face challenges in the fund management sector from centres such as Singapore due to rising uncertainty over its position as a tax haven. With some political leaders and decision makers including EU member states, which support a full information exchange in tax matters, showing their discontent towards the country's banking secrecy practices, concerns have risen among many clients of the financial centre."

And remember, both Credit Suisse and UBS are based in the U.K.--living in Zurich or Geneva can seem dull by London standards.

5. Shanghai
Because Beijing said so

• Amazing access to China
• Financial reforms coming
• Because Beijing wants to crush Hong Kong

In April 2009, the Chinese government declared it wanted to make Shanghai an international financial center by 2020. And when the Chinese government declares something, it usually makes it happen.

As Reuters notes , new skyscrapers continue to rise, including the 101-story Shanghai World Finance Centre, meant to be the Asian headquarters for international banks. Adding to the surge are China's continued economic growth and potential financial reforms, like index-tracking ETF funds, foreign companies listing on local exchanges, and financial and commodity futures.

Problem is, there's still Hong Kong. Shanghai's stock market if is worth more than Hong Kong's, with a market capitalization of $2.7 trillion compared with $2.3 trillion in Hong Kong; it's also more focused on retail investors. But Shanghai has 869 listed companies to Hong Kong's 1297, according to Reuters.

According to the World Economic Forum report, China's banking financial services "are sizeable (eigth in the world), yet are considerably less efficient (30th) and are pulled down by a high degree of public ownership (48th) and weaker profitability (34th)."

6. Hong Kong
Disneyland for bankers

• The rapidly growing Asian finance leader
• Low, low taxes
• Western-friendly city

Hong Kong has long been an Asian financial center because of its gateway role to China and banking-friendly special administrative status.

The financial crisis weakened Hong Kong, but the region still had the most IPO proceeds in the world last year, plus strong hedge fund and M&A activity.

While still the undisputed Chinese leader, the government is pushing Shanghai as a rival. But Hong Kong has a big lead--its exchange has 1297 listed companies compared to 869 in Shanghai. And, as Reuters notes , Hong Kong has a deeper pool of financial services than Shanghai with insurance, law, accounting and other professional service firms already well established.

Helping Hong Kong's case as an emerging financial center are its tax rates. Low by OECD standards, corporations are charged just 16.5 percent and, as Reuters reports, there are no capital gains, sales or VAT taxes. Plus, taxes are also only levied on income made in Hong Kong and income tax is a flat 15 percent.

7. Singapore
Literally, everything is perfect

• Bankers love it because it's way sunnier than New York
• Super easy to start a business
• Good financial infrastructure and support; everything works

Singapore's developed and efficient banking sector make it an important player on the global stage. An October 2009 Bloomberg Global Poll found that the tiny country had topped New York as investors' preferred place for doing business, second only to London.

Still, Singapore's playing catch-up to Hong Kong: the special Chinese region has more hedge fund, IPO and M&A activity, according to the World Economic Forum report and ranking.

Generally, Singapore's position is gaining strength. The KPMG/Dubai report ranked the country first overall, noting that "in the capability measurement rankings, Singapore has a clear lead over other centres. It ranks first in both business environment as well as the cost of doing business Singapore's performance in terms of its capability is consistent with the steady improvement in its ranking and scores in various financial centre surveys."

8. Tokyo
The contrarian banker play

• Still a critical Asian hub
• Major IPO and M&A player
• Could lose ground to other Asian cities

Tokyo remains a critical Asian financial center despite plenty of doubts. Japan's economy is reeling from the financial crisis and faces crushing government debt totaling 170 percent of GDP , all while Hong Kong and Shanghai are battling to be the gateway to China and surpass Tokyo as a regional banking hub.

But before writing off Tokyo, it's important to note its relative strength in an increasingly important region. After the "lost decade" of the 1990s, Japan's financial sector is healthy, although behind Hong Kong. According to the World Economic Forum report, the country's banks are "sizeable and efficient" and "similar strengths are seen across non-banking financial services such as IPO [third globally] and M&A activities [eigth] and insurance."

Still, the same WEF report and ranking says "financial stability represents another development area for the country, with a less-stable banking system (40th) and currency (36th). The robust performance in measures of financial intermediation...do not seem to translate into enhanced financial access, with the country scoring a relatively weak 37th."

Plus, Japan may be losing ground to China. The KPMG/Dubai report put it this way: "In recent years, hedge funds and other investment funds with strong interests in Japan have increasingly considered shifting to other locations such as Hong Kong and Singapore, citing less onerous regulation of financial businesses, preferential tax treatment and lower-cost of hard and soft infrastructure compared to Tokyo."

9. Johannesburg
Where to belong in Africa

• Sophisticated financial infrastructure
• Financial hub of the world's last major untapped market--nearly 1 billion consumers
• Dangerous, tense city

Johannesburg is poised to be the financial hub of a continent which represents more than 900 million consumers and one of the world's fastest growing markets.

The South African city has the most developed business infrastructure south of the Sahara and South Africa generally gets strong marks for its financial sophistication.

The World Economic Forum report ranks South Africa 32nd overall, saying it "displays sound performance in most of the [Financial Development Index] pillars. Its institutional environment features strong corporate governance practices (seventh) complemented by world-class accounting and auditing standards (first). Its insurance sector is also well developed, with a high degree of penetration (second). The country's banking system has fared reasonably well through the current crisis, ranking 17th."

Of course, there are challenges to Johannesburg becoming a global financial hub. As the WEF notes, South Africa's business environment "continues to be negatively impacted by its lower development of human capital (50th) and bottlenecks in infrastructure (48th). Retail access to financial services (43rd) is also constrained."

10. Dubai
The desert financial dream isn't dead yet

• Emerging regional financial hub
• Amazing tax advantages
• Firesale prices on impossibly opulent housing and offices

Dubai spent heavily in recent years to position itself as a regional financial center and a player in international finance. But its debt-fueled, spendthrift ways finally caught up with the UAE member in late 2009; Dubai was forced to take a $10 billion bailout from Abu Dhabi and remains in serious financial trouble.

Still, Dubai remains the regional headquarters for financial powerhouses like Goldman Sachs, Citi, JPMorgan Chase. Having an office at the slick Dubai International Financial Centre has plenty of perks including: 100 percent foreign ownership; 0.0 percent tax rate on income and profit; no restriction on foreign exchange; and the freedom to repatriate capital and profits without restrictions.

In general the UAE achieves strong marks in the World Economic Forum's global index. "The country's highly stable banking system (first) contrasts with a high risk of sovereign debt crisis (41st). A favorable tax regime (second) is a key component of its business environment, although this is partly offset by its high cost of doing business (41st). The UAE's banks are efficient (18th), although financial information disclosure is poor...Consistent with its relatively developed equity markets, the UAE has shown significant IPO activity in recent years, though the lasting impact of the financial crisis on these activities has yet to be seen."