Hong Kong's Securities Markets Boom

by Mary Swire, Tax-News.com, Hong Kong

20 June 2007

The Hong Kong securities market marked two major trading milestones on June 18 as the Hang Seng Index closed at a record high of 21,582, up 565 points, and securities market turnover hit HK$101 billion (US$12.9 billion) - the largest ever.

The turnover value for H-share and red-chip companies was HK$44 billion and HK$15 billion. Derivative warrants turnover was also at its highest level ever, at HK$15.8 billion.

A total of 798,209 trades were concluded, breaking the previous record of 720,072 on June 15. The closing market capitalisation was a new high of HK$15.7 trillion. The previous high was set on June 15, at HK$15.4 trillion.

Hong Kong Exchanges and Clearing has previously announced plans to further capitalise on its unique position in relation to the Chinese market, and in December 2006 rolled out its strategic plan for 2007-09, providing a roadmap for the next three years.

HKEx has made good progress in the listing of Mainland enterprises, including major state banks and insurance companies. As at November, 2006, there were 1,159 listed companies in Hong Kong, with a market capitalisation of HK$12.197 trillion (US$1.57 trillion), a total of HK$424.8 billion equity funds raised, and an average daily turnover of HK$32.8 billion. Among the listed companies, 354 came from the Mainland, which accounted for 48% of the market capitalisation and 73% of the total equity funds raised.

Noting that Hong Kong has become the major capital formation centre in the Asian region, HKEx Chief Executive Paul Chow has said that new challenges and opportunities are emerging, and HKEx has to bolster its overall performance and advance its mission to be a leading international marketplace for securities and derivatives products focused on Hong Kong, the Mainland and the rest of Asia.

Under the strategic plan, 16 key initiatives (grouped under five key areas) were identified:

• Listing - complete Growth Enterprise Market review and related market development, implement 'statutory backing', and open the equity listing regime to issuers from overseas jurisdictions;
• Trading - improve trading rights regime, address barriers to Cash and Derivatives Markets trading, introduce further Mainland-related and renimbi-denominated products, and explore new product and service areas;
• Clearing - facilitate overseas-based clearing participants, and improve investor participant and stock segregated accounts services;
• Corporate - strengthen the accountability regime within HKEx, review its organisation structure and resources deployment, consolidate it offices and data centres, and review fee structure; and,
• Information technology - review HKEx information technology systems for possible efficiency improvement.

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