ENG-2010 — Page 94

52 The Economy

The Mainland is likewise Hong Kong's largest source of

of foreign direct investment. By end-2009, the market value of direct investment from the Mainland in Hong Kong reached US$341 billion, accounting for 36 per cent of the total external direct investment. Mainland companies also maintain a strong presence in Hong Kong. As at mid-2010, Mainland companies had established 261 regional headquarters or regional offices, and 528 local offices in Hong Kong. All these reflected Hong Kong's position as a regional services hub.

In tandem with the surge in cross-boundary business activities, financial links between Hong Kong and the Mainland have strengthened substantially over the

years.

Hong Kong is a major funding centre for Mainland enterprises. A total of 592 Mainland enterprises were listed on Hong Kong's stock market as of end-2010. Among them, 72 were listed in 2010. Driven by the strong economic performance of the Mainland, a total of $473.6 billion of equity funds was raised by Mainland enterprises during 2010. The listing and fund-raising activities further consolidated Hong Kong's position as one of the world's major fund-raising centres.

In addition, Renminbi (RMB) business in Hong Kong continued to develop steadily in 2010. At year's end, a total of 111 licensed banks engaged in RMB services business, and outstanding RMB deposits reached RMB314.9 billion, accounting for around 11.5 per cent of total foreign currency deposits in Hong Kong. The RMB bond market in Hong Kong has been growing steadily since its launch in June 2007. By the end of 2010, RMB bonds totalling RMB74 billion had been issued in Hong Kong. There has been a significant increase in the range of issuers from Hong Kong and multinational companies to international financial institutions. Moreover, the expansion of the RMB trade settlement pilot scheme announced on June 22, 2010 allows trade transactions of 20 provinces and cities in the Mainland to be settled in Hong Kong in RMB. A variety of RMB financial products also emerged in the market, including RMB fixed-income funds. In addition, life insurance companies in Hong Kong are now offering policies in RMB. The rapid expansion of RMB business in Hong Kong signified the Mainland's recognition of Hong Kong as its premier international financial centre.

The economic co-operation and integration with the Mainland has been fostered through the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). In May 2010, the Hong Kong Special Administrative Region Government and the Central People's Government signed Supplement VII to CEPA, introducing 35 market liberalisation and trade and investment facilitation measures in 19 sectors. Among them, 27 are liberalisation measures in 14 service sectors, of which eight are measures for 'early and pilot implementation'. Inclusive of the measures in Supplement VII, Hong Kong Service Suppliers can enter the Mainland market in 44 service sectors under preferential treatment. The new measures will further assist Hong Kong service industries to enter the Mainland market, and foster integration and professional exchanges between the service industries of both sides.