ENG-1994 — Page 112

FINANCIAL AND MONETARY AFFAIRS

90

The importance of Hong Kong in the global banking world is also demonstrated by its external orientation. At the end of November, banks and deposit-taking institutions held US$590 billion of external assets, which accounted for about eight per cent of the world total. Based on this measure, the territory was ranked among the highest in the world.

Equally well established is the interbank money market. Wholesale deposits are traded actively both among local authorised institutions, and between local and overseas institu- tions, with an average daily turnover of $127.8 billion in December. The interbank money market is mainly for short-term money— with maturities ranging from overnight to 12 months, for both Hong Kong dollars and US dollars. The traditional lenders of Hong Kong dollars are mostly the locally-incorporated banks, while the major borrowers are those foreign banks without a strong Hong Kong dollar deposit base. At the end of the year, the interbank market accounted for 33 per cent of the Hong Kong dollar liabilities, and 77 per cent of the foreign currency liabilities, of the banking sector.

The territory also has a mature and active foreign exchange market, which forms an integral part of the global market. The link with other overseas centres enables foreign exchange dealing to continue 24 hours-a-day around the world. Based on the latest survey conducted by the Bank for International Settlements, the daily average foreign exchange turnover in Hong Kong in April 1992 was US$61 billion, which represented 5.4 per cent of the world total. Hong Kong was ranked sixth in the world, after the United Kingdom, the United States, Japan, Singapore and Switzerland.

The local stock market recorded exceptional volatility in 1994. Following the strong upswing in late 1993, the Hang Seng Index reached a record intra-day high of 12 599 on January 4, 1994. The market turnover also peaked in January and, on one occasion, exceeded $17 billion. The market, however, then consolidated in line with the global trend. Concern about increases in US interest rates was the main factor dampening investment sentiment. The index closed at 8 191.04 on December 30, 1994—31 per cent below the closing of 11 888.39 at the end of 1993. The average daily turnover in the local stock market dropped to $4.6 billion in 1994, compared with $4.9 billion in 1993.

At the end of the year, 529 public companies were listed on the Stock Exchange of Hong Kong Limited. With a total market capitalisation of $2,085 billion, the Hong Kong stock market ranked eighth in the world and second in Asia. The number of newly-listed companies was 53, raising a total of $17.2 billion. Among these newly-listed companies, nine were state-owned enterprises of the People's Republic of China. They attracted particular market attention. The listing of these enterprises in Hong Kong was one of the most important market development initiatives in recent years. The process started in July 1993 and, so far, a total of 15 enterprises have listed in Hong Kong, altogether raising $17.9 billion of capital.

In addition to new share issues, funds were tapped through rights issues ($5.6 billion) and private placements ($10.5 billion).

Hang Seng Index options and Hang Seng Index futures continued to be actively traded on the Hong Kong Futures Exchange. The average daily turnover for the Hong Kong Index options increased from 1 186 contracts in 1993 to 2 446 in 1994. The volume of Hang Seng Index futures trading averaged 16 906 contracts per day in 1994 - a 74 per cent increase over the 9 702 contracts traded per day in 1993 - with a post-1987 crash high of 42 438 contracts reported on October 25. Hang Seng Sub-Index futures were, however, unable to