ENG-2014 — Page 105

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Financial and Monetary Affairs

RMB30 billion, and 18 SFC-authorised RQFII ETFs adopted dual counter trading arrangements (ie RMB and HKD trading counters) with an aggregate net asset value of RMB53 billion. The RQFII scheme continues to promote the development of a broader range of RMB investment offerings in Hong Kong and to strengthen the city's position as the leading offshore RMB centre.

The RMB conversion limit for Hong Kong residents of RMB20,000 per day was removed on 17 November 2014, making it more convenient for Hong Kong residents to participate in Shanghai-Hong Kong Stock Connect and other RMB financial transactions and facilitating the launch of RMB investment products by financial institutions in Hong Kong.

Meanwhile, RMB financing activities gained further momentum. There was a significant growth in RMB bank lending, with the outstanding amount of RMB loans increasing to RMB188 billion at the end of 2014, from RMB116 billion at the end of 2013. RMB bond issuance in Hong Kong (or so-called 'dim sum bonds') totalled RMB197 billion in 2014, up 69 per cent from 2013. Outstanding RMB bonds amounted to RMB381 billion at the end of 2014. In 2014, the Central People's Government issued sovereign bonds twice, with a total size of RMB28 billion, up from RMB 23 billion in 2013.

Since the pilot scheme for eligible institutions to invest in the Mainland's interbank bond market was extended to insurance companies in Hong Kong in 2012, 13 Hong Kong insurance companies have been permitted to invest in the Mainland's interbank bond market.

Shanghai-Hong Kong Stock Connect

Stock Connect, launched on 17 November 2014, enables mutual stock market access between the Shanghai Stock Exchange (SSE) and the SEHK. It allows eligible Mainland investors to trade directly for the first time in eligible stocks listed on the SEHK through the SSE, and allows Hong Kong and overseas investors to trade directly for the first time in eligible stocks listed on the SSE through the SEHK.

Stock Connect marks an important step in the opening up of Mainland China's capital markets and the internationalisation of RMB. It also reinforces Hong Kong's position as a premier international financial centre and strengthens Hong Kong's role as an offshore RMB business centre.

Mainland and Hong Kong Closer Economic Partnership Arrangement

The Closer Economic Partnership Arrangement (CEPA) between the Mainland and Hong Kong, which came into force in 2004, gives Hong Kong's financial service providers and professionals greater market access and flexibility for their Mainland operations. It has also enhanced Hong Kong's attractiveness to market users and strengthened the city's competitiveness as an international financial centre and the premier capital formation centre for Mainland enterprises.

On 18 December, the Central People's Government and the Hong Kong Special Administrative. Region Government signed the Agreement between the Mainland and Hong Kong on Achieving Basic Liberalisation of Trade in Services in Guangdong, to be implemented on 1 March 2015. The agreement adopts a hybrid approach of negative and positive listings in

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