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FINANCIAL AND MONETARY AFFAIRS
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HONG KONG's financial sector comprises an integrated network of institutions and markets which, under various forms of regulation, provide a wide range of products and services to local and international customers and investors.
Some 537 authorised institutions and local representative offices of banks from about 40 countries conduct business under the Banking Ordinance. The presence of 85 of the world's top 100 banks has helped promote the territory as an international financial centre. The external assets of the banking sector and the forex turnover are among the highest in the world.
Hong Kong has the second largest stock market in Asia outside Japan. In 1994, the market faced consolidation in line with the global bearish trend. Having peaked at an historical intra-day high of 12 599 points on January 4, the Hang Seng Index drifted generally downwards in the subsequent months. It closed the year at 8 191, 31 per cent below the level at the end of 1993.
In August, Hong Kong took a major step forward in improving the transparency of financial reporting by the authorised institutions. In a joint announcement, the Hong Kong Monetary Authority (HKMA), the Stock Exchange of Hong Kong Limited and the Securities and Futures Commission announced recommendations on additional disclosures to be included in the accounts of both listed and non-listed authorised institutions for accounting periods ending on, or after, December 31, 1994.
The joint disclosure package will provide greater detail on, among other things, the institutions' actual level and breakdown of profits and the nature and quality of assets, bringing Hong Kong's standard of disclosure substantially in line with that of other major financial centres.
Also in August, the World Bank and the International Monetary Fund announced that their 52nd annual meetings will be held in Hong Kong in September 1997. The HKMA is responsible for the planning of this prestigious event, which will be a timely affirmation of Hong Kong's continuing status as an international financial centre.
On October 1, the Hong Kong Association of Banks removed the interest rate ceiling on Hong Kong dollar deposits fixed for more than one month.
This was the first step in a phased liberalisation programme, announced in August, that will introduce more competition in retail interest rates and be conducive to product innovation and greater efficiency.