S’pore leaps to 4th spot on financial centre list

Republic moves up from 10th place as it displays strength amid recession

SINGAPORE’S ranking as a financial centre has shot up from 10th to fourth because of the way the country’s financial system has weathered the global recession.

The crisis played havoc with the order of things in financial markets over the past year, with a few big guns like the United States being eclipsed, according to the World Economic Forum (WEF).

The WEF’s analysis of economic growth and the financial systems of 55 countries found that the crisis was acutely felt by most global financial systems.

The scores of most countries on the Index in the annual Financial Development Report fell significantly from last year, with some of the largest economies taking the biggest hit.

Germany and France, in particular, suffered such heavy falls in overall scores that they dropped out of the top 10 list.

Britain, buoyed by the relative strength of its banking and non-banking financial activities, claimed the Index’s top spot from the US, which slipped to third behind Australia due to its poorer financial stability scores and a weakened banking sector.

Australia showed particular strength, a trend echoed in many Asia-Pacific economies, including No. 5 Hong Kong.

‘The change in scores does demonstrate the implications of the downturn on our assessment of the long-term development of financial systems,’ said Professor Nouriel Roubini of New York University, the lead academic on the report.

In the financial stability section of the Index, Singapore fared well at fifth, compared with Britain at 37th and the US at 38th. Norway and Switzerland took the top two spots, while Hong Kong was third. Some developing countries performed well, with Malaysia, Mexico and Brazil in the top 15.

Prof Roubini noted how developing countries had performed well in the area of financial stability: ‘For some, this is the result of learning from the mistakes of past financial crises, while for others it may reflect the relative lack of complexity and global integration of their financial systems.’

The report explained that the breadth of factors it covered meant that countries with high financial instability scores such as Britain and the US could still achieve a high relative ranking in the Index due to their other strengths.

‘We hope this report will provide some insight as to how the financial crisis has affected the world’s major financial systems,’ said Mr Kevin Steinberg, the WEF’S chief operating officer for the US.

The rankings are based on more than 120 factors, including institutional and business environments, financial stability, and the size and depth of capital markets.

How they rank

FINANCIAL Development Report rankings for this year. Last year’s rankings are indicated in brackets.

1. Britain (2)

2. Australia (11)

3. United States (1)

4. Singapore (10)

5. Hong Kong SAR (8)

6. Canada (5)

7. Switzerland (7)

8. The Netherlands (9)

9. Japan (4)

10. Denmark (NA)

Source : Straits Times – 10 Oct 2009