Speaking at the Asian Securities Analysts Federation 2001 Conference on Monday, Mr Sheng suggested that the region undertake something along the lines of the European pattern of mergers and alliances, warning that fragmentation and lack of co-operation between the Asian markets could see the area's 11 stock exchanges trailing behind their Western competitors.

'By segmenting into local markets, Asia lacks highly liquid markets,' observed the SFC chief. Mr Sheng told delegates that European mergers and alliances allowed markets there to offer cross border trading, thus making them more attractive to international investors, in addition to concentrating liquidity and and reducing clearing and settlement costs.

Mr Sheng said that the outflow of funds from the Asian region as investors sought more liquid markets was a growing problem, and revealed that although Asia now represents around half of the global population, and around one third of the world's gross domestic product, at the end of October, the 11 Asian stock markets, including Japan, Hong Kong, and China had a market capitalisation of around US$4.57 trillion, which represents a mere 16% of the world's total.

Meanwhile, the Chairman of the HKEx, Charles Lee Yeh-kwong, has revealed that Hong Kong Exchanges and Clearing is considering a link-up with New York and other world exchanges, and told the South China Morning Post recently that he would soon be announcing changes to the market's trading hours, which are currently among the shortest in the world.