Hong Kong was named the best city in the world for financial market development, beating out perennial front runners New York and London.

The World Economic Forum (WEF) said that the semi-autonomous Chinese territory has the world's leading financial systems and capital markets. Not only is Hong Kong, which placed fourth on last year's list, the first-ever Asian city to take the title, it is also the first time that neither the United States nor the United Kingdom came in first.

The U.S., whose financial capital is New York City, came in second while the UK placed a spot below. Rounding out the top five were Singapore and Australia.

The WEF cited Hong Kong's non-banking financial services, including IPOs and the insurance industry, as the reason for its placement, which was aided by the effect that the continuing global financial crisis has had on other economies.

Hong Kong's ascent to the top of our index marks a major milestone, stated Kevin Steinberg of the WEF.

While Western financial centers 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, Steinberg added.

According to the report (found here in pdf form), close to 90 percent of the countries on the list are still below their pre-2008 capital levels. Additionally, European countries fell down the rankings due to the Euro zone turmoil that has gripped the continent this year.

Countries are facing enormous challenges and their policy responses should address not only the immediate symptoms of the crises, but also their underlying causes. These responses need to be effective and instill more resilience into the system, but at the same time it is important to avoid unintentionally inhibiting economic growth, the report stated.

The Financial Stability Index ranks a total of 60 countries looks at factors such as financial stability, the development of capital markets and overall institutional and business environment.