FINANCIAL AND MONETARY AFFAIRS
financial institutions in the Mainland by authorised institutions in Hong Kong registered an annual growth of about 19.4 per cent to $207 billion.
Many banks from Hong Kong have expanded their businesses in the Mainland. A total of 19 locally incorporated banks had established 35 branches and 34 representative offices there at the end of 1999.
Portfolio investment in the form of 'China funds' has also become increasingly popular. By the end of 1999, 30 such funds had been authorised by the SFC to invest in B-shares listed on the Shanghai and Shenzhen stock exchanges as well as H-shares listed on the SEHK.
Hong Kong has also facilitated the Mainland's overseas fund-raising activities via the SAR's equity and debt markets. Hong Kong is committed to making full use of the more favourable conditions of the Hong Kong market, including higher liquidity, better research coverage, and closer proximity to the Mainland market to provide better services to the Mainland enterprises seeking overseas listing.
At present, Hong Kong is the most important overseas listing market for Mainland enterprises. At end-1999, 43 Mainland-incorporated enterprises had been listed on the Stock Exchange of Hong Kong through the issuance of H-shares, raising a total of more than $56 billion.
In addition, as part of their restructuring for overseas listing, some Mainland state- owned enterprises have reincorporated in Hong Kong and listed on the SEHK. Examples include China Telecom (Hong Kong) Limited, which, since its initial public offering in October 1997, has become the second largest company in Hong Kong in terms of its market capitalisation.
The Mainland has also expressed strong interest in the development of the GEM as a listing venue for the high-growth companies in the Mainland. In October, the China Securities Regulatory Commission (CSRC) and the SFC of Hong Kong signed Letters of Exchange with the aim of strengthening their regulatory co-operation for the Mainland companies to be listed on the GEM.
Enhancement of Financial Infrastructure
As part of the three-prong strategy announced in his budget speech in March for reforming the securities and futures markets in Hong Kong, the Financial Secretary appointed a Steering Committee on the Enhancement of the Financial Infrastructure to study and recommend the necessary improvements to the SAR's financial infrastructure. The objective of the study is to enhance the competitiveness of Hong Kong as an international financial centre in terms of risk mitigation, increased efficiency and cost reduction. Key issues studied by the Steering Committee include a single clearing arrangement for securities, stock options, futures and other exchange- traded transactions, straight-through processing and scripless securities market. The Steering Committee submitted in October its recommendations for action and implementation timetable to the Financial Secretary. The Government will work with the industry and facilitate implementation of the recommendations through regulatory and legislative measures, as necessary, as quickly as possible.
The HKMA has worked closely with the banking community to enhance the robustness of Hong Kong's interbank payment system. With the efforts of the HKMA and the banking industry in the past few years, Hong Kong's interbank payment system successfully changed to the new Real Time Gross Settlement (RTGS)
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