ENG-2006 — Page 113

Financial and Monetary Affairs 85

Mainland fund managers. Hong Kong managers have also embarked on ways to enable investors to capture investment opportunities on the Mainland. At year-end, there were 14 SFC authorised funds with significant exposure to the A-share market on the Mainland. These included the first equity fund that directly invests in A-shares via the fund manager's own QFII quota and an ETF that tracks the A-share market, funds that invest indirectly in A-shares via equity-linked investments issued by qualified foreign institutional investors and guaranteed funds with their upside potential returns linked to the A-share market performance.

Renminbi Business in Hong Kong

Since its launch in early 2004, renminbi business in Hong Kong has developed in a steady and orderly manner and it expanded further in 2005. By year-end, the outstanding renminbi deposits in Hong Kong had reached RMB 22.7 billion. The use of renminbi debit and credit cards by Mainland tourists in Hong Kong has grown steadily, with the cumulative total of credit/debit card spending and cash withdrawal amounting to $21.7 billion at year-end. The average transaction size of credit/debit card spending was about $2,700.

Capital Formation Centre and Global Investment Platform for the Mainland

Hong Kong's fundamental strengths, including high market liquidity, a robust regulatory system, efficient information flow, a rich pool of financial professionals and proximity to the Mainland market, mean that it is well placed to provide excellent services to Mainland enterprises seeking listing in an international financial centre.

The rapidly expanding Mainland market provides abundant opportunities. The presence of Mainland issuers has increased both the breadth and depth of Hong Kong's securities and futures markets. Hong Kong's equity market has evolved from one with a high concentration of property and finance businesses into a market with a great diversity of constituent stocks and a wide range of products.

Hong Kong has developed into the premier international fund-raising centre for Mainland enterprises. At year-end, 367 Mainland enterprises were listed in Hong Kong, raising a total of $1,471.3 billion since 1993. Most of the Mainland enterprises listed outside the Mainland chose to list on the SEHK. The 10 largest IPOs of all enterprises listed on the SEHK were all from the Mainland.

Apart from the equity market, Mainland enterprises raise capital in Hong Kong through the issuance of bonds, project financing and loan syndication. Mainland enterprises also have easy access in Hong Kong to investment banking services for mergers and acquisitions, and consultancy on restructuring.

Hong Kong, with its financial facilities, experts and first-rate regulatory regime, already has all the right ingredients to develop its asset management business even further. In April, the Mainland authorities announced measures to allow investment in overseas financial markets by Mainland companies and individuals through qualified institutional investors covering commercial banks, securities firms and insurance institutions. The new measures, commonly referred to as the Qualified Domestic Institutional Investors (QDII) Scheme, would strengthen the role of Hong Kong as an