ENG-2001 — Page 114

FINANCIAL AND MONETARY AFFAIRS

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The interbank money market is well established. Wholesale deposits are traded actively among local authorised institutions, and between local and overseas institutions, with an average daily turnover of $206.1 billion in 2001.

Hong Kong also has a mature and active foreign exchange market, which forms an integral part of the global market. The link with overseas centres enables foreign exchange dealings to continue 24 hours a day around the world. The latest triennial survey co-ordinated by the Bank for International Settlement (BIS) shows the daily average foreign exchange turnover in Hong Kong in April 2001 to be US$66.8 billion, which represents 4 per cent of the world's total transactions and makes Hong Kong the world's seventh largest foreign exchange market.

With a total market capitalisation of $3,885 billion as at end 2001, the Hong Kong stock market ranked 10th in the world and third in Asia, following Japan and the Mainland (Shanghai and Shenzhen). The daily turnover in the local stock market averaged $8 billion in 2001. At the end of the year, 756 public companies were listed on the Stock Exchange of Hong Kong Limited (SEHK), a wholly-owned subsidiary of the Hong Kong Exchanges and Clearing Limited (HKEx). The 88 (including 57 on the Growth Enterprise Market) newly-listed companies raised a total of $27 billion of capital. Besides new share issues, funds were also raised in the secondary market with a total amount of $38.7 billion. Funds raised in H-shares and red-chips markets amounted to $25.9 billion, some 40 per cent of the total funds raised in the Hong Kong market during the year.

Hong Kong's derivatives market is among Asia's largest, reflecting the increased sophistication of its financial markets. The over-the-counter derivatives contracts (including foreign exchange and interest rate derivatives) registered an average daily turnover of US$4.2 billion in April 2001, compared with US$3.8 billion in April 1998.

As regards stock options, contracts in respect of a total of 31 stocks were traded in the market by the end of the year. The average daily turnover of stock options contracts was 16 465 in 2001.

The average daily turnover of Hang Seng Index Futures traded on the Hong Kong Futures Exchange (HKFE) increased from 16 288 contracts in 2000 to 18 107 contracts in 2001, representing an increase of 11 per cent. The turnover of Hang Seng Index Options also increased to 2 947 contracts a day in 2001, compared with 2 202 in 2000, representing an increase of 34 per cent. Besides Index futures and options, the HKFE also traded in four currency futures and 30 stock futures contracts.

The Hong Kong fund industry is characterised by its strong international flavour, both in terms of the presence of global fund managers and authorised funds. In a survey conducted by the Securities and Futures Commission in 2001, 203 intermediaries registered with the commission and exempt persons declared their primary business as fund management managing portfolios and/or giving advice. on investment. The total assets under management by the portfolio managers amounted to $1,485 billion (US$190.4 billion) at the end of 2000.

The number of authorised unit trusts and mutual funds increased to 1 893 at the end of 2001 (excluding Mandatory Provident Fund-related unit trusts), compared to 1 791 at the end of 2000. The Tracker Fund of Hong Kong (TraHK), which was

1 Excluding assets that were managed by registered intermediaries or exempt persons who did not declare

advisory or management of funds as their primary business (e.g. banks).