Hong Kong beats Tokyo and Singapore to rank as Asia's top finance location

Its dominance, however, may be challenged by deepening trade tensions.

Hong Kong is ranked as the top finance location in Asia on the back of stellar scores in political stability, ease of doing business, simple tax systems, city infrastructure and regulatory governance, according to a report from Colliers International.

Additionally, the SAR only trails behind Singapore on human subcategories on the back of a low personal tax rate, city safety, quality of life and climate. "All these points make Hong Kong attractive as a location to work and live in to expatriate staff," the report's authors said.

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The latest reading of the Global Financial Centres Index (GFCI) also hails Hong Kong as the third most attractive financial centre in the world as it makes a case for Asia by trailing a few points behind New York and London who hold the top two spots.

As most of the region's emerging markets double down to catch up to Hong Kong's dominance, the SAR has been making steady investments into fintech to stay relevant as it leverages on its status and role as gateway to the Mainland to lure large financial tenants.

Fintech firms are now joining international banks who have found a home in the SAR as they either use decentralised lcoations for their innovation and technology divisions or turn to flexible workspace like HSBC who set up its innovative tech teams in WeWork centres in 2016.

In fact, 63% of Hong Kong-based financial groups have plans to continue expanding over the next year, whilst 43% and 38% of North American and European companies aim to grow their domestic footholds, according to a Colliers survey.

The escalating US-China trade dispute, however, poses a major risk to Hong Kong's attractiveness to financial tenants with growth set to taper off in the second half of 2018, further aggravated by asest market turbulence.

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Equities have fallen into bear market territory after the benchmark Hang Seng Index crashed by more than 20% from its January peak.

There is a well-known historic relationship in Hong Kong between the level of the Hang Seng index and average Grade A office rents in Central," said Colliers. "[W]e doubt that rents can continue to rise significantly if the stock market falls further, considering that financial occupiers account for 54% of Grade A office space in Hong Kong’s CBD by our estimate."

The report examined 16 countries in developed and emerging markets across Asia on 60 criteria relevant to choice of location under three headings: socio-economic factors, property factors and human factors.