Hong Kong has jumped to the position of the world’s number one financial centre, from fourth place last year, overtaking the UK and the US, and beating its closest rival Singapore.

According to the annual Financial Development Index published this week by the World Economic Forum, Hong Kong takes the number one spot, pushing the US into second place, for the first time on record. Hong Kong was buoyed by non-banking financial services like initial public offerings and insurance, while the Western capital markets sputtered due to economic uncertainty. 

The rest of the countries in the top ten saw only minor changes - Japan increased by one rank, while the UK, Singapore, and Switzerland each dropped one position. The only change in composition was Norway’s replacement of Belgium at the tenth spot, said the report. 

Korea (18th) and China (19th) joined the top 20, highlighting the ongoing power shift from West to East. Meanwhile Finland and Ireland dropped out, moving to 21st and 22nd place, respectively. China joins Malaysia as the second of only two emerging economies within the top 20.

The biggest changes this year are down to underlying financial intermediation, said Geneva-based WEF.

“Banking financial services sees the majority of economies increase in score, whereas non-banking financial services and financial markets see the majority of economies experiencing declines. Although this may be expected given the overall deterioration of the economic environment, a potentially more troublesome aspect is the effect this may have on the overall ability of firms to secure financing on a sustainable basis,” said the authors of the report.

The Financial Development Index provides a score and rank for 60 of the world’s leading financial systems and capital markets. The Index analyses drivers of financial system development that support economic growth across the seven pillars of the index, which include: institutional environment, business environment, financial stability, banking financial services, non-banking financial services, financial markets and financial access.