ENG-2007 — Page 107

Financial and Monetary Affairs 67

• continuing to be one of the most open insurance markets in the world and achieving an annual growth in premium of 15 per cent for the last five years; and

⚫ the market capitalisation of Real Estate Investment Trusts (REITs) rising to

$66 billion by year-end.

Hong Kong as an International Financial Centre

A favourable geographical position, bridging the time gap between North America and Europe; strong links with the Mainland and other economies in Southeast Asia and excellent communications with the rest of the world; the rule of law; a level playing field and a sound regulatory regime have all helped Hong Kong develop into both a leading international financial centre in the region and the premier capital formation centre for the Mainland. The absence of restrictions on capital flows into and out of Hong Kong is another important strength.

Hong Kong's financial markets are characterised by a high degree of liquidity. They operate under effective and transparent regulations, which are in line with international standards. A highly educated workforce and ease of entry for professionals from outside Hong Kong also contribute to the development of its financial markets.

International financial institutions maintain a strong presence in the city. Of the world's top 100 banks, 68 have operations in Hong Kong. At the end of 2007, there were 258 foreign-owned authorised institutions (including licensed banks, restricted licence banks and deposit-taking companies) and local representative offices in Hong Kong.

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 $432 billion in 2007.

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 dealing with the rest of the world 24 hours a day. The last triennial survey coordinated by the Bank for International Settlements in 2007 showed Hong Kong recording a daily average foreign exchange turnover of US$174.6 billion. Hong Kong continues to be the world's sixth largest foreign exchange market.

With a total market capitalisation of about $20,698 billion at year-end, the Hong Kong stock market ranked seventh in the world and third in Asia. The daily turnover averaged $88.1 billion in 2007. At year-end, 1 241 public companies were listed on the Stock Exchange of Hong Kong (SEHK). The 84 newly listed companies raised $290.6 billion from initial public offerings (IPOs). Hong Kong ranked fourth worldwide in terms of IPO funds raised. Besides new share issues, $267.9 billion were raised on the secondary market. The REIT market continued to develop and the aggregate market capitalisation reached $66 billion at year-end.