Hong Kong Tops US, UK in Global Financial Development Survey

Hong Kong has passed the US and the UK to become the first Asian market to become the most highly developed global financial center, according to an annual survey by the World Economic Forum. China’s SAR had been ranked fourth in the 2010 survey.

“Hong Kong’s ascent to the top of our index marks a major milestone,” said Kevin Steinberg, COO of World Economic Forum USA. “While Western financial centers are understandably focused on short-term challenges, this report should serve as a wake-up call that their long-term leadership may be in jeopardy.”

Loss of financial stability resulting from the 2008 financial survey caused the US and UK to slip to the second and third spots, respectively from their top positions since the Geneva-based WEF began the survey in 2007.

Singapore fell a notch to fourth but other Asian nations moved up in the rankings of 60 markets. Japan moved up a notch to 8th, Malaysia rose a notch to 16th, South Korea jumped six notches to 18th and China surged three spots to 19th place.

Factors that favored Asian economies in this survey included market’s business and institutional environment, financial stability and development of stock, bond, currency and derivative markets. In western markets IPO and takeover activity slowed considerably due to the freezing up of securitization markets and the liquidity crisis caused by the subprime crisis.

The purpose of the survey is to identify areas for reform and to encourage long-term measures that support global financial system development. The impact of the survey, however, will likely encourage even more inbound investments into Asian economies by adding to investor confidence while having the reverse impact on western economies.