FINANCIAL AND MONETARY AFFAIRS
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As regards stock options, contracts in respect of a total of 17 stocks were traded in the market by the end of the year. The average daily turnover of stock options contracts was 8 899 in 1999, representing an increase of 33 per cent over that of 1998.
During the year, the average daily turnover of Hang Seng Index Futures decreased from 28 217 contracts in 1998 to 20 778 contracts in 1999, representing a decline of 26 per cent. The turnover of Hang Seng Index Options also decreased to 2 892 contracts a day in 1999, compared with 3 234 in 1998, representing a decrease of 11 per cent. The futures exchange also traded in four currency futures and 17 stock futures contracts.
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. Trading in this market has expanded in recent years. The price of Loco-London gold moved between US$251.7 and US$338.0 in 1999, and closed at US$287.5 as at end-1999, which was comparable to US$288 at end-1998.
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 $2,692 per tael, compared with $2,652 at the end of 1998. Turnover on the exchange totalled seven million taels in 1999.
The number of authorised unit trusts and mutual funds decreased to 1 583 at end of 1999 compared with 1 637 a year earlier. In the year, the market had given much attention to the launching of the Tracker Fund of Hong Kong (TraHK) by the Exchange Fund Investment Limited, which was established in October 1998 to manage the Hang Seng Index (HSI) constituent stocks acquired by the Government in the same year. TraHK contains a portfolio of HSI stocks and is a unit trust product tracking the HSI. The initial offer of TraHK took place in October 1999 and received very positive response from the market. It is generally believed that the successful launching of this new product will be conducive to the development of the unit trusts and mutual funds in Hong Kong.
The Hong Kong dollar debt market has continued to expand. The size of the debt market, as measured by the outstanding amount of Hong Kong dollar debt securities, reached $416.3 billion at end-1999, compared with $390.1 billion at end-1998. Of this, Exchange Fund Bills and Notes amounted to $101.9 billion. The size of the market was equivalent to about 30 per cent of Hong Kong's GDP.
The Hong Kong insurance industry also has a strong international presence. Among the 207 authorised insurers at the end of 1999, 108 are overseas insurers from 26 countries or the Mainland while 12 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 28, including most of the top reinsurers in the world. Latest statistics show that gross premium income in 1998 was over $54 billion, representing about 4.2 per cent of Hong Kong's GDP.