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Hong Kong rose from fourth to first place as a top financial center, according to the 2011 Financial Development Report recently released by the World Economic Forum (WEF). The annual report shows Hong Kong surpassing both the United States and the United Kingdom, a significant change from the 2010 rankings.

Drawing from a variety of financial indicators, the WEF study looks at the top 60 competing capital markets and financial systems in the world. It considers seven areas that strongly contribute to developing financial systems and that promote economic growth. These include financial stability, financial markets, business environments, institutional environments, financial access, and both banking and non-banking financial services.

from wikipedia

Hong Kong is the first Asian financial center to reach the top position in the WEF report, earning a score of 5.16 out of a possible 7.0. The achievement largely involved high scores in non-banking services, including insurance and initial public offerings, or IPOs.

Despite falling to second place, the United States mostly maintained its scores from 2010. Financial intermediation results accounted for the steadiness, overcoming any ongoing concerns about financial stability. Relatively strong securitization activities played a part in maintaining the scores, as did mergers and acquisitions. The strength of derivatives and foreign exchange markets also contributed.

The United Kingdom dropped in both position and score, falling to third place on the list primarily from lower scores in IPO movement and securitization. Singapore achieved fourth place, moving into Hong Kong’s former position.

John C. Tsang, Hong Kong’s Financial Secretary, welcomed the recognition of Hong Kong as an internationally competitive financial center. He detailed the strengths highlighted in the WEF report, noting the non-banking services as well as achievements in the other studied categories. He pledged to continue Hong Kong’s growth as a top financial center and as the offshore hub for Mainland China’s renminbi currency.

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