In so-called City of Angels owns capital (5)
I believe the answer is:
lhasa
'capital' is the definition.
(capital of Tibet)
'in so-called city of angels owns' is the wordplay.
'in' indicates putting letters inside.
'so-called city of angels' becomes 'LA' (short for Los Angeles).
'owns' becomes 'has' ('have' can be a synonym of 'own').
'la' enclosing 'has' is 'LHASA'.
(Other definitions for lhasa that I've seen before include "Tibet's "Forbidden City"" , "Tibetan holy city" , "Group; stripe" , "Sacred city" , "Capital of Tibet" .)