Financial and Monetary Affairs 95
issued by qualified foreign institutional investors, and guaranteed funds with their upside potential returns linked to the A-share market performance.
Personal Renminbi Business in Hong Kong
The Chief Executive announced on November 18, 2003 that, following the approval of the State Council, the PBOC agreed to provide clearing arrangements for personal RMB banking business in Hong Kong. Personal RMB business in Hong Kong was launched smoothly in early 2004. Banks in Hong Kong began to offer RMB deposit-taking, currency exchange, remittance and bank card services. At year-end, the outstanding RMB deposits in Hong Kong reached RMB 12 billion yuan. The use of RMB debit and credit cards by Mainland tourists in Hong Kong has grown steadily, with the cumulative total of credit/debit card spending and cash withdrawal amounting to $2.9 billion as at the end of 2004. The average transaction size of credit/debit card spending is about $3,000.
The launch of personal RMB business in Hong Kong has not only helped facilitate cross-boundary tourist spending and promote economic integration between Hong Kong and the Mainland, but also enhanced the competitiveness of the banks in Hong Kong and the attractiveness of Hong Kong as an international financial centre. The Government will continue to discuss with the relevant Mainland authorities further development of RMB business in Hong Kong.
Hong Kong as an International Capital Formation Centre and Platform for Global Investment for the Mainland
The Government is committed to making full use of the favourable conditions of the Hong Kong market, including higher liquidity, a robust legal system, efficient information flow, availability of professional expertise, and proximity to the Mainland market, to provide better services to Mainland enterprises seeking listing in an international financial centre.
The rapidly expanding Mainland market represents a massive opportunity. The presence of Mainland issuers has increased both the breadth and depth of Hong Kong's securities and futures markets. Hong Kong's equity market has evolved from one highly concentrated in properties and finance businesses into a market with a great diversity of constituent stocks and a wide range of products.
Hong Kong has established itself as the most important international fund- raising centre for Mainland enterprises. At year-end, 304 Mainland enterprises were listed in Hong Kong. Significantly, most of the Mainland enterprises that had listed outside the Mainland chose to list on the SEHK. Mainland enterprises (H-shares, red-chips and minying enterprises) have raised $901 billion directly and indirectly through Hong Kong since inception, including $110.4 billion raised in 2004. In the past 11 years, the 10 largest IPOs on the SEHK have involved Mainland enterprises.
Apart from the equity market, Mainland enterprises raise capital in Hong Kong through issuance of bonds, project financing and loan syndication. Mainland