ENG-2004 — Page 107

Financial and Monetary Affairs | 77

red-chips and minying enterprises (non-H-shares Mainland Private enterprises). In 2004, about $75.4 billion was raised in new listings of Mainland enterprises in Hong Kong, accounting for 79 per cent of the total funds raised in initial public offerings (IPOs) on the SEHK. The market capitalisation of Mainland enterprises accounted for about 30 per cent of the total market capitalisation. In 2004, the total annual trading turnover of Mainland enterprises accounted for 49 per cent of the total annual equity turnover of the Hong Kong stock market. It is expected that Mainland issuers will continue to be a major growth driver of the securities market of Hong Kong in the future.

The average daily turnover of Hang Seng Index (HSI) Futures and Mini-HSI Futures traded on the Hong Kong Futures Exchange Limited (HKFE) increased from 27 588 contracts and 5064 contracts in 2003 to 34 824 contracts and 5 902 contracts in 2004 respectively, representing increases of 26 per cent and 17 per cent. The average daily turnover of H-shares Index Futures rose by 1.2 times to 7 060 contracts in 2004 from 3 196 contracts in 2003. The average daily turnover of HSI Options and Mini-HSI Options decreased from 8 596 contracts and 130 contracts in 2003 to 8 215 contracts and 109 contracts respectively, representing drops of 4.4 per cent and 16 per cent. The daily turnover of H-shares Index Options, launched in June 2004, averaged 566 contracts. Apart from index futures and options, the HKFE also traded 36 stock futures contracts with an average daily turnover of 70 contracts in 2004. As regards stock options, contracts in respect of a total of 37 stocks were traded in the market by year-end. The average daily turnover of stock options was 22 720 contracts in 2004.

The Hong Kong fund management industry is characterised by its strong international flavour, in terms of the presence of both global fund managers and authorised funds. The Securities and Futures Commission (SFC) conducted a survey in 2004 on the fund management business in Hong Kong, which comprises assets. management, advisory business and other private banking activities3. Survey results demonstrated that as at December 31, 2003, fund management business amounted to $2,947 billion (US$378 billion). Of this total, $2,317 billion (US$297 billion) was reported by 166 fund management companies and $630 billion (US$81 billion) was reported by 30 registered institutions4.

Hong Kong operates one of the most active physical gold markets in the world. Spot gold can be traded through two closely related yet independent markets in the city the Chinese Gold and Silver Exchange Society and the Loco-London gold market.

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For the purpose of the survey, 'other private banking activities' are defined as the provision of financial services to private banking clients other than by means of type 9 regulated activity as defined in Schedule 5 of the Securities and Futures Ordinance. They include managing clients' portfolios of securities and/or futures contracts wholly incidental to the carrying on of type 1 and/or type 2 regulated activity.

A 'registered institution' means an authorised financial institution registered under section 119 of the Securities and Futures Ordinance. An 'authorised financial institution' means an authorised institution as defined in section 2(1) of the Banking Ordinance.