HONG KONG FINANCIAL ROUND-UP December-January 1993
Hang Seng Index Rises 28% in 1992
The Hang Seng Index closed on the last trading day of 1992 at 5512.39, a rise of 28 per cent over the year. During 1992, the stock market broke records with the index closing at a new high of 6447.11 points and trading turnover edging past HK$700 billion (US$90 billion).
Stock Exchange to Authorise Prospectuses
Subsidiary laws will be made to enable the function, of authorising registration of prospectuses offering shares or debentures to be listed on the stock exchanges, to be transferred to the Hong Kong Stock Exchange (SEHK). The Registrar of Companies will continue to be responsible for registering prospectuses, but will cease to take responsibility for vetting them prior to registration. The statutory responsibility for authorising prospectuses for registration will be vested in the Securities and Futures Commission, but the function of authorising prospectuses relating to securities to be listed on the stock exchange will be transferred from the Securities and Futures commission to the SEHK.
Business Activity Up in 1992
The total number of companies registered under the Companies Ordinance in 1992 increased by 18 per cent to 358,129. The total number of overseas companies which had an established place of business in Hong Kong under part XI of the companies ordinance rose by 13 per cent to 3,193.
Small Increase in Insolvencies
The number of new compulsory company liquidations and new personal bankruptcies in 1992 rose by 1.27 per cent to 342 and 295 respectively over the previous year. The total number of new cases at 637 was 91 per cent of the highest ever total figure of 699 cases recorded in 1985. The businesses affected by compulsory company liquidations and bankruptcies included garment and knitting manufacturing, restaurants and canteens, importers and exporters, and company directors giving personal guarantees.
Priority Claims for Small Depositors
The Executive Council has agreed in principle to a proposal to introduce legislation aimed at giving small depositors priority claims in the event of the liquidation of a bank. The move follows careful analysis of the pros and cons of introducing a deposit protection scheme (DPS). A government spokesman said that after taking into account the views collected during the consultation exercise, a decision was taken not to introduce a DPS. Contrary to a widespread belief that small depositors would be in favour of a DPS, a majority of the submissions were against such schemes. However, the Consumer Council has voiced its objection to the decision to drop the idea of a deposit protection scheme, arguing that a priority scheme really depends on whether the bank in question has any assets left while the DPS will offer greater protection to depositors.
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