Hong Kong as an International Financial Centre
A favourable geographical position, which bridges the time gap between North America and Europe, strong links with the Mainland and other economies in South-East Asia and excellent communications with the rest of the world, the high respect for the rule of law, a level playing field as well as a sound regulatory regime have helped Hong Kong develop into a leading international financial centre in the region and the premier capital formation centre for the Mainland. The absence of any restrictions on capital flows into and out of Hong Kong is another important strength.
Hong Kong's financial markets are characterised by a high degree of liquidity. They operate under effective and transparent regulations, which meet international standards. A highly educated work force and ease of entry for professional staff from outside Hong Kong further contribute to the development of financial markets in Hong Kong.
Hong Kong has a very strong presence of international financial institutions. At the end of 2001, there were 133 foreign-owned banks. Of the world's top 100 banks, 76 have operations in Hong Kong, while 86 subsidiaries or related companies of foreign banks operate as restricted licence banks and deposit-taking companies. A further 111 foreign banks have local representative offices.
The interbank money market is well established. Wholesale deposits are traded actively among local authorised institutions, and between local and overseas institutions, with an average daily turnover of $206.1 billion in 2001.
Hong Kong also has a mature and active foreign exchange market, which forms an integral part of the global market. The link with overseas centres enables foreign exchange dealings to continue 24 hours a day around the world. The latest triennial survey co-ordinated by the Bank for International Settlement (BIS) shows the daily average foreign exchange turnover in Hong Kong in April 2001 to be US$66.8 billion, which represents 4 per cent of the world's total transactions and makes Hong Kong the world's seventh largest foreign exchange market.
With a total market capitalisation of $3,885 billion as at end 2001, the Hong Kong stock market ranked 10th in the world and third in Asia, following Japan and the Mainland (Shanghai and Shenzhen). The daily turnover in the local stock market averaged $8 billion in 2001. At the end of the year, 756 public companies were listed on the Stock Exchange of Hong Kong Limited (SEHK), a wholly-owned subsidiary of the Hong Kong Exchanges and Clearing Limited (HKEx). The 88 (including 57 on the Growth Enterprise Market) newly-listed companies raised a total of $27 billion of capital. Besides new share issues, funds were also raised in the secondary market with a total amount of $38.7 billion. Funds raised in H-shares and red-chips markets amounted to $25.9 billion, some 40 per cent of the total funds raised in the Hong Kong market during the year.
Hong Kong's derivatives market is among Asia's largest, reflecting the increased sophistication of its financial markets. The over-the-counter derivatives contracts (including foreign exchange and interest rate derivatives) registered an average daily turnover of US$4.2 billion in April 2001, compared with US$3.8 billion in April 1998.
As
regards stock options, contracts in respect of a total of 31 stocks were
traded in the market by the end of the year. The average daily turnover
of stock options contracts was
The
average daily turnover of Hang Seng Index Futures traded on the Hong Kong
Futures Exchange (HKFE) increased from
The Hong Kong fund industry is characterised by its strong international flavour, both in terms of the presence of global fund managers and authorised funds. In a survey conducted by the Securities and Futures Commission in 2001, 203 intermediaries registered with the commission and exempt persons declared their primary business as fund management — managing portfolios and/or giving advice on investment. The total assets under management by the portfolio managers amounted to $1,485 billion (US$190.4 billion)1 at the end of 2000.
The
number of authorised unit trusts and mutual funds increased to
Hong Kong has two active gold markets, in which the main participants are banks, major international and local bullion houses and gold trading companies. One is commonly known as the Loco-London gold market, with process quoted in US dollars per troy ounce of gold of 99.99 per cent fineness and with delivery in London.
The Chinese Gold and Silver Exchange Society operates one of the largest gold bullion markets in the world. Gold traded through the society is of 99 per cent fineness, weighted in taels2 and quoted in Hong Kong dollars. Prices closely follow those in the other major gold markets in London, Zurich and New York. Turnover on the exchange totalled 4.3 million taels in 2001.
The Hong Kong insurance industry also has a strong international presence. Among the 204 authorised insurers at the end of 2001, 105 were insurers from 24 overseas countries and the Mainland. Eleven of the world's top 20 insurers are authorised to carry on insurance business in Hong Kong either directly or through a group company. Professional reinsurers numbered 29, including most of the top reinsurers in the world. Gross premium income in 2000 was $64.4 billion, representing about 5.1 per cent of Hong Kong's Gross Domestic Product (GDP).
| 1 | Excluding assets that were managed by registered intermediaries or exempt persons who did not declare advisory or management of funds as their primary business (e.g. banks). |
| 2 | One tael equals approximately 1.20337 troy ounces. |