Singapore keeps spot among top 4 finance hubs
The Straits Times/Asia News Network
November 2, 2012, 12:24 am TWN
SINGAPORE -- Singapore has retained its position as the world's fourth-best financial center in this year's World Economic Forum (WEF) report, with a better overall score.
Improved financial stability, a stable currency, a strong trade balance and healthy international investment enabled the Republic to keep its ranking.
Hong Kong claimed the top spot in the financial development index for the second year running. It was followed by the United States and Britain, then Singapore, Australia and Canada. These top rankings were the same as last year's.
The fifth edition of the WEF report analyzed 62 financial systems and capital markets to compare their overall competitiveness. It measures efforts and reforms across three categories: factors, policies and institutions; financial intermediation; and financial access.
Singapore scored best in financial markets, given its highly developed foreign exchange, derivatives and equity markets.
Areas for improvement include better disclosure of financial information in banking financial services and further developing the bond market.
And while Singapore scored highly in terms of commercial access to capital, it lagged behind in retail access to capital.
Hong Kong's status as top financial center was led by a large and efficient banking system, well-developed infrastructure and robust equity markets.
"Despite these strengths, Hong Kong has a relatively underdeveloped bond market and its financial sector has yet to be fully liberalized," said the report.
Australia finished behind Singapore for the third straight year, with strengths in financial and banking system stability.
China fell four places to 23, partly owing to greater banking instability, and weak retail and commercial access to capital.
The U.S. continued its leading role in non-banking financial services and financial markets.
The WEF report comes at a time when the global financial system, hit by a series of crippling crises, remains fragile with rising funding costs, higher commodity prices and volatile capital flows.
Europe is riddled with debt and high unemployment. The U.S. — the world's largest economy — faces political gridlock during fiscal uncertainty and mounting public debt, while the slowing economies of China and Brazil could adversely impact global trade.
"Restoring faith in the markets will be a monumental task," said WEF executive chairman Klaus Schwab in the report.
While the global economy is improving, it has yet to stabilize. "Financial systems in advanced and emerging economies are stalling," said WEF Senior Director Giancarlo Bruno.