ENG-1998 — Page 102

FINANCIAL AND MONETARY AFFAIRS

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At the end of the year, 680 public companies were listed on the Stock Exchange of Hong Kong Ltd. (SEHK). With a total market capitalisation of $2,662 billion, the Hong Kong stock market ranked eleventh in the world and second in Asia. The 32 newly-listed companies raised a total of $5.95 billion of capital. Besides new share issues, funds were also tapped through rights issues ($5.39 billion) and private placements ($16.4 billion).

As regards stock options, contracts in respect of a total of 17 stocks had been launched by the end of the year. During the year, the futures exchange also traded in three currency futures and 17 stock futures contracts.

Hang Seng Index Futures remained actively traded and average daily turnover increased from 26 313 contracts in 1997 to 28 208 contracts in 1998. The turnover of Hang Seng Index Options however decreased to 3 293 contracts a day in 1998, compared with 4 683 in 1997.

Hong Kong has an active gold market, in which the main participants are banks, major international and local bullion houses and gold trading companies. It is commonly known as the Loco-London gold market, with process quoted in US dollars per troy ounce of gold of 99.95 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$271 and US$314.7 in 1998, and closed at US$288 as at year's end, which was comparable with US$288.6 a year earlier.

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 $2,656 per tael, compared with $2,670 at the end of 1997. Turnover on the exchange totalled 12.4 million taels in 1998.

The number of authorised unit trusts and mutual funds increased to over 1 600 at end 1998, up from 1 473 a year earlier.

The Hong Kong insurance industry also has a strong international presence. Among the 209 authorised insurers at the end of 1998, 108 are overseas insurers from 27 countries or the Mainland while 10 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 29, including most of the top reinsurers in the world. Latest statistics show that gross premium income in 1997 reached $52 billion, representing about 3.9 percent of Hong Kong's GDP.

Financial Institutions

The Banking Sector

licensed

Hong Kong maintains a three-tier system of deposit-taking institutions banks, restricted licence banks and deposit-taking companies which are collectively called authorised institutions under the Banking Ordinance. The Hong Kong Monetary Authority (HKMA) is the licensing authority for all three types of authorised institutions.