ENG-2008 — Page 130

86 | Financial and Monetary Affairs

a level playing field for Islamic bonds (sukuk) vis-à-vis conventional bonds. Market response to the Government initiative is positive as reflected in the launching of Islamic bonds, funds, indices and banking windows.

Upgrading of the Quality of Financial Reporting

The Hong Kong Financial Reporting Standards (HKFRS), issued by the HKICPA, have been fully convergent with the International Financial Reporting Standards (IFRS). This convergence is beneficial to Hong Kong because international investors and financial analysts are well acquainted with the IFRS.

The Government is acutely aware of the need to maintain an effective, transparent and accountable regulatory regime for the accountancy profession.

The Financial Reporting Council (FRC) which became fully operational in 2007, is a new statutory body that investigates the audit irregularities and accounting non- compliances of listed companies in Hong Kong. The FRC received 29 complaints in 2008, of which investigations into 19 were completed by year-end.

Expanding the Sources of Listed Enterprises on the Exchange

Hong Kong is the premier capital formation centre for the Mainland whose enterprises raised $2,146 billion during the past few years. At year-end, 465 Mainland enterprises were listed on the Hong Kong stock exchange, accounting for 37 per cent of listed companies in Hong Kong; their market capitalisation accounted for 60 per cent of the total market capitalisation; and their turnover accounted for 71 per cent of the stock market's daily equity turnover.

The HKEX has been stepping up its promotion of Hong Kong as a preferred listing venue and establishing closer co-operation with other stock markets. These initiatives included the signing of MoUs with the Abu Dhabi Securities Market and the Moscow Interbank Currency Exchange to establish co-operation in areas such as information exchange. The HKEX also has MoUs with the Ho Chi Minh and Mongolian stock exchanges.

HKEX members also pay visits regularly to the Mainland, Vietnam, Thailand, Malaysia, Kazakhstan, Russia, Taiwan and other places to promote Hong Kong as a premier capital formation centre.

Promoting Asset Management Business

Asia's saving rates are high compared to other regions. Located at the heart of Asia, Hong Kong is well positioned to further develop as an international asset management centre. According to the Fund Management Activities Survey 2007 released by the SFC in 2008, the combined fund management business of banks, major insurance companies and other corporations grew by 57 per cent from $6,154 billion in 2006 to $9,631 billion in 2007. The number of retail funds in Hong Kong was 2 040 in 2007, valued at $8,400 billion.

The Government continues to lead financial services delegations to the Mainland and different countries to promote Hong Kong's financial services and its advantages as a major asset management centre in Asia. At the same time, the SFC