ENG-2001 — Page 115

FINANCIAL AND MONETARY AFFAIRS

offered in October 1999 and contains a portfolio of Hang Seng Index constituent stocks, was well received by the market. The market capitalisation of TraHK amounted to $24.1 billion by the end of 2001.

Hong Kong has two active gold markets, in which the main participants are banks, major international and local bullion houses and gold trading companies. One is commonly known as the Loco-London gold market, with process quoted in US dollars per troy ounce of gold of 99.99 per cent fineness and with delivery in London.

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 taels2 and quoted in Hong Kong dollars. Prices closely follow those in the other major gold markets in London, Zurich and New York. Turnover on the exchange totalled 4.3 million taels in 2001.

The Hong Kong insurance industry also has a strong international presence. Among the 204 authorised insurers at the end of 2001, 105 were insurers from 24 overseas countries and the Mainland. Eleven 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. Gross premium income in 2000 was $64.4 billion, representing about 5.1 per cent of Hong Kong's Gross Domestic Product (GDP).

Financial Services in Hong Kong

Banking Sector

Main Features

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

Only licensed banks may conduct full banking services, including in particular the provision of current and savings accounts and the acceptance of deposits of any size. and maturity. Restricted licence banks may take deposits of any maturity of $500,000 or above. Deposit-taking companies are owned mostly by, or otherwise associated with, licensed banks. Deposit-taking companies may take deposits of $100,000 or above with an original maturity of no less than three months.

Hong Kong has one of the highest concentrations of banking institutions in the world. At the end of 2001, 147 licensed banks, 49 restricted licence banks and 54 deposit-taking companies, which were beneficially owned by interests from 31 countries around the world, were in business in Hong Kong. These 250 authorised institutions operated a comprehensive network of 1 507 local branches. In addition, there were 111 representative offices of overseas banks in Hong Kong. A local representative office is not allowed to engage in any banking business, and its role is confined to liaison work between the bank and its customers in Hong Kong.

2 One tael equals approximately 1.20337 troy ounces.

71