ENG-2008 — Page 127

Financial and Monetary Affairs | 83

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one with a high concentration of property and finance businesses to a market with a great diversity of constituent stocks and a wide range of products.

Hong Kong has become the premier international fund-raising centre for Mainland enterprises. At year-end, 465 Mainland enterprises were listed in Hong Kong, together raising a total of $2,146 billion since 1993. The 10 largest IPOs listed on the SEHK were all from the Mainland.

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

In April 2006, the Mainland authorities announced measures to allow Mainland companies and individuals to invest overseas through qualified institutional investors covering commercial banks, securities firms and insurance institutions. The measures, commonly referred to as the Qualified Domestic Institutional Investors (QDII) Scheme, are a further boost to the development of Hong Kong's asset management industry. Since 2007, nine QDII funds have been launched, all of which have their portfolio mandates to invest in the Hong Kong stock market.

In March 2008, the SFC signed a Regulatory Co-operation Agreement of Understanding with the China Insurance Regulatory Commission (CIRC). This is the first regulatory co-operation agreement on the use of Mainland insurance funds outside the Mainland.

The Government and the regulatory authorities will continue to promote the links and co-operation between Hong Kong and the Mainland on financial services.

Mainland and Hong Kong Closer Economic Partnership Arrangement

Under the Closer Economic Partnership Arrangement (CEPA), Hong Kong's financial services suppliers and professionals enjoy greater market access and flexibility for their operations on the Mainland. CEPA's implementation has enhanced Hong Kong's attractiveness to market users, well as strengthened its competitiveness as an international financial centre and the premier capital formation centre for Mainland enterprises.

On May 4, the China Securities Regulatory Commission (CSRC) announced measures allowing qualified Mainland fund management companies to set up operations in Hong Kong under CEPA IV. By year-end, the subsidiaries of two Mainland fund management companies had been licensed to conduct asset management business in Hong Kong.

Hong Kong-incorporated banks have gained greater access to the Mainland market since the implementation of CEPA in January 2004. A further section, Supplement V, was added to CEPA this year, giving Hong Kong additional privileges. One of Supplement V's provisions allows the data centres of Hong Kong's Mainland- incorporated banking institutions to locate in Hong Kong, provided they meet the criteria set out in the agreement in Supplement V and the relevant Mainland regulations.