Hong Kong has been named the world’s most developed financial market by the World Economic Forum (WEF), usurping the position of the US.
In becoming the first Asian economy to hold the top spot in the think tank’s ranking, Hong Kong has jumped up three places from the fourth position it held last year.
The market achieved a top-ten ranking in all seven ‘pillars’ that are rated by the forum – institutional environment, business environment, financial stability, banking financial services, non-banking financial services, financial markets and financial access.
“Specifically, business environment performance is driven by a strong tax regime and highly developed infrastructure, whereas financial stability is positively affected by the low risk of sovereign debt crisis,” the WEF’s report says.
“Financial intermediation for Hong Kong proves to be resilient in a time of great uncertainty and volatility. Non-banking financial services such as IPO activity and insurance show considerable improvement.”
Access to commercial capital is another strong point for Hong Kong, as equity market financing and foreign direct investment is “particularly robust”.
However, “relative weakness” was noted in Hong’s securitisation activity and bond market development, while areas for improvement within the business environment pillar include tertiary enrolment and the cost and time needed to register property.
Hong Kong replaced the US in first position, with the US now being deemed the world’s second most developed financial market. “Results vary across the seven pillars as the United States exhibits a clear mix of strengths of weaknesses,” the report says.
The institutional environment and financial stability pillars are considered especially weak, while strengthening auditing and reporting standards, ethical behaviour of firms and protection of minority shareholders’ interests are in need of improvement. The US is also “plagued” by banking system and currency volatility, the research adds.
The UK was judged the third most developed financial market, followed by Singapore, Australia, Canada, the Netherlands, Japan, Switzerland and Norway.
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