Crisis aids Australia's push to be Asia finance hub

Australia's ability to weather the global downturn has enhanced its bid to become Asia's financial hub, observers said, after a report ranked its market ahead of those of Singapore and Hong Kong.

The World Economic Forum ranked Australia second in its annual survey of financial systems and capital markets earlier this month, behind Britain but ahead of the United States.

The forum found that while major markets had been acutely hit by the global financial crisis, Australia had showed particular strength, even among the better performing Asian economies.

The ranking was welcome news for the centre-left Labor government of Prime Minister Kevin Rudd which has been pushing for the country's financial services sector to become an Asian hub, despite the limitations of distance.

"In terms of making Australia into a financial services hub, we see this financial crisis as an opportunity," Financial Services Minister Chris Bowen said following the release of the survey.

"For years to come, the world's investors will be looking to see who got through this crisis the best: which system of prudential regulation worked? Which financial institutions got through this crisis the best? Which nation survived the global financial crisis?"

"And, in Australia, we are in a very strong position place to argue that it's us -- that our real economy, our financial sector have withstood the shocks of the last two years better than any other."

Bowen said Australia's equity market was the eighth largest in the world while the country had the biggest pool of funds under management in Asia.

Meanwhile Australia is the only major Western nation to have avoided a recession in the worldwide slump, posting growth of 0.6 percent in the three months to June -- the best in the developed world.

Duncan Fairweather, executive director of the Australian Financial Markets Association, said the "centre of gravity for capital markets in the Asian time zone tends to be north rather than south."

"But I think Sydney is generally recognised as very capable. I don't think there's anything against Sydney becoming a financial hub," he told AFP.

Sydney regularly ranked within the top 10 of global markets and Australia boasted a strong, well regulated banking system which had stared down the global slump, he added.

"Our banking system avoided incurring the risks that banks in Europe and North America did and therefore have come through very strongly," he said.

"It's often quoted, but nonetheless true, that of the nine 'AA' rated banks in the world at the moment, four of them are Australian."

Geoff Weir, director of the Australian Financial Centre Forum which is advising the government on how to make the financial sector a regional hub, said markets Down Under typically ranked highly in terms of efficiency, competitiveness, range of services and quality of regulation.

"Most assessments suggest that, for the most part, it's a very efficient, competitive financial sector," Weir said.

"But an important issue for Australia... is whether there are policy impediments to our ability to export our financial services skills and also impediments to our capacity to access offshore capital at competitive rates."

Weir said issues relating to taxation were a significant barrier to Australia taking full advantage of its financial services skills.

But he said the possibilities were encouraging for markets Down Under.

"The Asia-Pacific region is the fastest growing region in the world and we're on the edge of it so in that sense we are better placed than the US or London," he said.