FINANCIAL AND MONETARY AFFAIRS
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Hong Kong stock market ranked eighth in the world and second in Asia. The 82 newly-listed companies raised a total of $81.7 billion. Besides new share issues, funds were tapped through rights issues ($16.5 billion) and private placements ($78.2 billion).
As regards stock options, contracts in respect of 15 other stocks had been launched by the end of the year. During the year, the futures exchange also traded in three currency futures and 15 stock futures contracts.
Hang Seng Index Options and Hang Seng Index Futures remained actively traded. Average daily turnover for index options increased from 4 393 contracts in 1996 to 4 683 in 1997. Index futures trading averaged 26 313 contracts a day in 1997, compared with 18 699 a day in 1996.
Hong Kong has an active gold market, in which the main participants are banks, major international bullion houses and gold trading companies. It is commonly known as the Loco-London gold market, with process quoted in US dollars per troy ounce of gold of 99.95 per cent fineness and with delivery in London. Trading in this market has expanded in recent years. The price of Loco-London gold moved between US$283 and US$362 in 1997. The price of gold dropped from US$367.30 per troy ounce at the end of 1996 to US$288.60 per troy ounce at the end of the year.
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 taels (one tael equals approximately 1.2 troy ounces) and quoted in Hong Kong dollars. Prices closely follow those in the other major gold markets in London, Zurich and New York. The price of gold at the Chinese Gold and Silver Exchange Society exhibited movement similar to that of Loco-London gold. At the end of the year, gold cost $2,670 per tael compared with $3,409 at the end of 1996. Turnover on the exchange totalled 16.4 million taels in 1997.
The number of authorised unit trusts and mutual funds increased to 1 473 at the year's end, from 1 311 a year earlier.
The Hong Kong insurance industry also has a strong international presence. Among the 215 authorised insurers at the end of 1997, 114 were overseas insurers from 27 countries or the Mainland, while 13 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 number 22, which includes most of the top reinsurers in the world. Latest statistics show that gross premium income in 1996 reached $46.4 billion, representing about 3.8 per cent of Hong Kong's GDP.
Financial Institutions
Hong Kong maintains a three-tier system of deposit-taking institutions licensed banks, restricted licence banks and deposit-taking companies which are collectively called authorised institutions under the Banking Ordinance. The Hong Kong Monetary Authority (HKMA) is the licensing authority for all three types of authorised institutions.
The authorisation criteria for locally-incorporated applicants and overseas applicants for a banking licence are broadly the same. However, a local applicant incorporated in Hong Kong must, in the opinion of the HKMA, be closely associated and identified with Hong Kong. A local applicant must also have a paid-up capital of