Hong Kong became the world?s most developed financial market, overtaking the US and the UK for the first time, according to the Financial Development Report 2011 published by the World Economic Forum (WEF) on Wednesday.

The US and the UK dropped a place each to rank second and third, respectively. Hong Kong jumped from fourth rank to become the first Asian financial centre to lead the 60-country index.

Its score was bolstered by strong scores in non-banking financial services such as initial public offering activity and insurance.

Foreign assets in Hong Kong?s Exchange Fund stood at HK$2,169.9 billion (or $278.99 billion) at the end of November, the Hong Kong Monetary Authority said separately on Wednesday.

Launched in 2008, WEF?s financial development index ranking is based on efficiency and size of banking and other financial services, business environment and financial stability, size and depth of the capital markets, and effective financial intermediation, among a total of 120 variables.

The US dropped from the No. 1 spot as ?financial stability continues to remain a concern? there. The UK lost out due to concerns on the securitisation market and IPO activity.

IPO sales were muted the world over against the backdrop of euro-zone troubles and a slowdown in the US. IPOs globally plunged 35% in 2011 to $175 billion compared with a year ago, according to Bloomberg data.

A recent report from the McKinsey Global Institute sees the emergence of an ?equity gap? in the future as demand for equity capital by investors will be far lower than corporations? desire and need to raise equity.

The WEF said that the after-effects of the global financial crisis that began in September 2008 continue to hamper companies? ability to access capital.

?While Western financial centres are understandably focused on short-term challenges, this report should serve as a wake-up call that their long-term leadership may be in jeopardy,? Kevin Steinberg, COO of the WEF, said in the statement.

About 90% of the countries surveyed are yet to return to levels before the crisis in terms of access to capital, even as financing through local equity markets remains challenging, the report said.

Singapore dropped one rank to the fourth due to securitisation markets drying up and a weak banking system. Australia, Canada and the Netherlands maintained their 5th, 6th and 7th ranks, followed by Japan, Switzerland and Norway.