The Hong Kong Financial Markets
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The Hong Kong Financial Markets Professor Stephen Y.L. Cheung Department of Economics and Finance City University of Hong Kong
description
The Hong Kong Financial Markets. Professor Stephen Y.L. Cheung Department of Economics and Finance City University of Hong Kong. Content. 1. Hong Kong Financial Market Securities Market Banking 2. Currency Board System 3. Economic Situation of Hong Kong. Hong Kong Financial Market. - PowerPoint PPT Presentation
Transcript of The Hong Kong Financial Markets
The Hong Kong Financial Markets
Professor Stephen Y.L. Cheung
Department of Economics and Finance
City University of Hong Kong
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Content
1. Hong Kong Financial Market Securities Market Banking
2. Currency Board System
3. Economic Situation of Hong Kong
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1. Hong Kong Financial Market
A. Securities Market Hong Kong Exchange and Clearing Co.
The Stock Exchange of Hong Kong The Hong Kong Futures Exchange The Hong Kong Clearing Ltd.
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A. Securities Market Objectives of Merger
Cost efficiency New financial innovations Reduce overlapping of business Market-oriented Reduce overlapping of regulating structure
1. Hong Kong Financial Market
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Market capitalization of Main Board and Hang Seng Index
0
1000
2000
3000
4000
5000
6000
91 92 93 94 95 96 97 98 99 00 01 02
Mar
ket
cap
ital
izat
ion
(in
bil
lio
n H
KD
)
2000
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8000
10000
12000
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16000
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HS
I
Market capitalization
HSI
1. Hong Kong Financial Market
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1. Hong Kong Financial MarketEquity Funds Raised Through IPO (hk$ million)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
120,000
1995 1996 1997 1998 1999 2000 2001 2002
HK
$ m
illi
on
IPO Total
H Share
Red Chips
Others
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1. Hong Kong Financial MarketIndex Performance of Major Stock Markets (end Q2 2003)
Q2 2003 % change from (in local currency)
Index Q1 2003 Q2 2003 End 2002
Mainland, Shanghai A 1555.9 -1.50% -14% 9.60%
China Shanghai B 112.3 -8.30% -25.50% -1.10%
Shenzhen A 428.3 -4.20% -19.90% 4.50%
Shenzhen B 215.7 6.20% -9.50% 15.40%
Hong Kong HSI 9577.1 10.90% -9.60% 2.70%
H Shares 2726.4 24.70% 25.80% 37.00%
Red Chips 1054.4 16.60% -11.60% 4.30%
Japan Nikkei 225 9083.1 13.90% -14.50% 5.90%
Singapore STI 1447.9 14.20% -6.80% 8.00%
Taiwan TWSE 4872.2 12.70% -5.50% 9.40%
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A. Securities Market
New Financial Product
Growth Enterprise Market (GEM)
1. Hong Kong Financial Market
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Growth Enterprise Market – Background
Established in November 1999Intention of becoming a centre of science and
technologyIndependent and alternative market, not a second
tier market to the main boardFor enterprises that have good business idea and
growth potential, but unable to obtain a listing in the Main Broad.
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Performance of Growth Enterprise Market
As of July 2003
Number of listed companies 179
Turnover value
Daily average turnover value
HKD 5997 million
HKD 273 million
Turnover volume
Daily average turnover volume
6344 million shares
1288 million shares
Number of deals
Daily average number of deals
104,838
4765.36
Total issued capital HKD 33.99 billion
Market capitalization HKD 64.73 billion
Growth Enterprise Index closing 1149.46 (base point = 1000)
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Market capitalization of GEM and S&P/HKEx GEM Index
0
10
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30
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Mar
ket C
apita
lizat
ion
(in b
illio
n H
KD
)
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2000
S&P/
HK
Ex
GE
M In
dex
Market Capitalization
S&P/HKEx GEM Index
S&P / HKEx GEM Market
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Characteristics of GEM (I)
Target at growth companies, big and smallReasonable prospect of significantly developing or
expanding their business, such as telecom-related and Chinese IT firms
Non-telecom-related: Wah Sang Gas Holdings, Far Eastern Polychem Industries
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Characteristics of GEM (II)
Higher degree of investors awareness of riskRisky market - more likelihood of business failure
and insolvency Future performance is less predictable
No proven profitable track record No obligation to forecast future profitability
Target for sophisticated investorsRisk Disclosure Statement
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Characteristics of GEM (III)
Disclosure-based regime Buyer-beware philosophy Greater, more frequent and timely disclosure Quarterly, half yearly and annual accounts Half yearly comparison of the business progress with the business
plan for the first 2 financial yearsSponsor scheme
Act as an adviser to assist the issuer to comply with the GEM Listing Rules
The principal channel of communication between the Exchange and the issuer
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Characteristics of the GEM (IV)
Strong corporate governance requirements Reduce the risk of malpractice Companies properly fulfill the listing obligations Measures:
Appointment of a qualified accountant to supervise the finance and accounting functions
Designating an executive director as the compliance officer 2 independent directors An audit committee
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B. Banking Interest rate agreement in 1964 Three-tier system
Licensed banks Restricted licensed banks Deposit taking companies
1. Hong Kong Financial Market
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Difference
Minimum capital requirementAbility to accept saving depositRestriction on maturity and amountDeposit rate
1. Hong Kong Financial Market
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Reforms
Interest rate agreement abolished (July 01)Deposit insurance schemeCredit reference agency Improvement on Corporate GovernanceTransparency
1. Hong Kong Financial Market
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Established in Oct. 1983
1 US dollar = 7.8 HK dollar
US dollars back the HK dollars
2. Currency Board System
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Advantages
ConfidenceNo exchange rate riskStable exchange rate
2. Currency Board System
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DisadvantagesCompetitivenessMacro-economic adjustment
US dollar appreciate → export↓US dollar depreciate → inflation↑
2. Currency Board System
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The GDP for 2003 is forecast to increase by 1.5% in real term
The unemployment rate is 8.7%
The inflation rate is -3.1%
3. Hong Kong Economic Situation
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3. Hong Kong Economic Situation
ProblemsEconomic transformation
No confident in futureWeak consumption marketAsset market deflation in property market and sto
ck market
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4. Hong Kong Economic Situation- Future Development
Fund raising centre for Mainland enterprise
QDII
RMB off-shore centre
Thank you
