FINANCIAL AND MONETARY AFFAIRS
In the local stock market, the shares prices gathered strong upward momentum since early 1992. Supported by favourable corporate results, the Hang Seng Index rose and rallied further in the second quarter. Continuing the upward trend established during the first two quarters and partly stimulated by the release of the impressive Exchange Fund size on July 15, local stock market prices rallied to 6 163 points on July 16. However since then the market underwent a period of consolidation. It then rebounded in early September and rose to a record high of 6 447 on November 12 before closing the year at 5 512, 28.3 per cent higher than the level at the end of 1991. The gain in the Hang Seng Index during the year of 28 per cent has outperformed those in many overseas stock markets. Average daily turnover in the local stock market increased notably to $2.8 billion in 1992, compared with $1.3 billion in 1991.
The number of newly listed companies increased markedly to 64 in 1992, raising a total of $12 billion. The more optimistic market sentiment as well as the reduction in the minimum requirements regarding issue capital and the length of track record by the Stock Exchange contributed to this increase. In addition to new share issues, funds were tapped through rights issues and open offers ($11.2 billion) and private placements ($26 billion).
The Hong Kong Futures Exchange launched futures contracts based on the four Hang Seng sub-indices (Commerce and Industry, Finance, Properties and Utilities) in the second half of 1991. Turnover in these contracts was moderate. Trading in the Hang Seng Index futures was more active. Daily turnover averaged 4 470 contracts in 1992, compared with 2 295 contracts in the preceding year.
Trading in commodity futures and interest rate futures remained modest. For the year as a whole, total turnover in gold futures amounted to 1 000 lots (100 troy ounces each), while turnover in interest rate futures was 205 contracts. Due to decreasing turnover, the Hong Kong Futures Exchange decided to terminate the trading of soya bean contracts in April and sugar contracts in October 1992. Turnover in soya bean futures amounted to 4 688 lots (30 000 kg each) from January to March, while turnover in sugar futures amounted to 8 598 lots (112 000 lb each) from January to September.
The price of Loco-London gold moved within a narrow range between US$360 to US$331 in 1992. Partly affected by the chaotic situation in the European forex markets around mid-September, the price of Loco-London gold rose, from US$336 at mid-August to US$352 per troy ounce at mid-September and closed the year at US$333. The price of gold at the Chinese Gold and Silver Exchange Society showed similar movements. At the end of 1992, it was HK$3,078 per tael. Turnover on the exchange totalled 24 million taels in 1992, similar to the level in 1991.
The number of unit trusts and mutual funds picked up to 900 at end-1992 from 854 at end-1991. Of the 112 newly authorised funds approved by the Securities and Futures Commission during the year, nine were China funds. Among the different types of funds, Hong Kong equity funds recorded the best performance in terms of investment return in the past year.
Following the conclusion of the Gulf war and in line with moves by the international community, Hong Kong lifted on March 15 the freeze on certain assets of Kuwait, introduced on August 6, 1990. The restrictions on certain Iraqi assets are still in place in accordance with the Hong Kong (Control of Gold, Securities, Payments and Credits; Kuwait and Republic of Iraq) Order 1990. In line with the resolution adopted by the United Nations Security Council on May 30, 1992, the Serbia and Montenegro (United
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