Transcript PUBLIC EQUITY CAPITAL – CHALLENES FOR EXCHANGES IN

The Mainland China Dimension of the Hong Kong
Securities Market
Charles Lee
Chairman, HKEx
China Financial Forum
Organised by Nomura Securities Co., Ltd
26 November 2004
Agenda
1. Highlights of the Hong Kong Securities Market
2. Mainland China Dimension
3. HKEx Positioning
4. Conclusions
2
HKEx is currently ranked 8th among global exchanges
by market capitalisation …
US$ billion
Sep 2004
14,000
12,000
Singapore:
ranked 21st
11,657
10,000
8,000
HK:
ranked 8th
6,000
4,000
3,127
Sum of HK, Shanghai and
Shenzhen ranked 6th in the world
(Market cap = US$1,258 bn)
648
637
381
345
342
334
201
149
Shanghai
Johannesburg
Korea
Singapore
Shenzhen
725
Taiwan
760
Australia
764
Switzerland
1,013
Spanish Exchanges (BME)
Toronto
Euronext
London
Nasdaq
Tokyo
NYSE
1,047
Italy
2,095
2,000
Hong Kong
2,505
Germany
3,124
0
Shenzhen:
ranked 24th
Shanghai:
ranked 14th
Source: World Federation of Exchanges, includes main board and parallel markets
3
… and 2nd by equity fund raised
US$ billion
Jan - Sep 2004
90
82.9
80
Singapore:
ranked 28th
70
Shenzhen:
ranked 20th
60
HK:
ranked 2nd
50
Shanghai:
ranked 13th
40
28.4
30
23.9
15.0
11.8
10
9.9
India
Nasdaq
Mumbai
Australian
Spanish
Euronext
TSX Group
Tokyo
London
NYSE
0
Hong Kong
6.4
5.6
5.2
2.7
1.3
Singapore
15.0
Shenzhen
15.4
Shanghai
17.5
JSE South Africa
18.7
20
Sum of HK, Shanghai and
Shenzhen ranks 2nd in the world
(Capital raised = US$36.3 bn)
Source: World Federation of Exchanges (not including exchanges for which statistics are not available).
Includes capital raised by issuers cross-listed on other exchanges, i.e. some double-counting involved.
4
Hong Kong cash and derivatives markets –
Key statistics
YTD Oct 2004
2003
2002
401.1
331.3
210.6
2.0
1.3
0.9
16.2
14.5
11.0
79,554
59,011
45,018
56
73
117
8.9
7.6
6.7
Fund raised in secondary market
(US$bn)
21.5
19.8
7.5
Total fund raised (US$bn)
30.4
27.4
14.2
Total turnover (US$bn)
Average daily turnover (US$bn)
Total # of derivatives contracts
traded (mn)
Average daily # of derivatives
contracts traded
# of new listings – equity
Fund raised by IPOs (US$bn)
5
Agenda
1. Highlights of the Hong Kong Securities Market
2. Mainland China Dimension
3. HKEx Positioning
4. Conclusions
6
Quotes from China’s Vice Premier, Huang Ju
“HK had established increasingly close ties with
the Mainland finance sector in recent years”
On HK’s status
“It is a win-win situation which:
- encourages reforms within the Mainland listed
enterprises
- contributes to the development and prosperity of the
Hong Kong financial sector”
“Room for further development was substantial”
On further cooperation
between Mainland
& HK
“CEPA clearly states that the Mainland and HK
will strengthen cooperation on various fronts in
the financial sector”
“With its implementation, finance practitioners
on the Mainland and in HK will cooperate in a
greater number of areas and on a higher plane,
allowing HK to develop better as an international
finance centre”
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Since the 1980s, Hong Kong has played a key role as a
bridge between Mainland China and the world
1980
Many HK listed
companies had
manufacturing
operations in Pearl
River Delta
Key
Events
HK- or foreignincorporated
Mainland
enterprises listed in
HK as Red Chips
1993
1994 onwards
H-shares
market
developed
Some H-share
and Red-Chip
companies
dual listed on
HK and
overseas
markets
Stock options,
futures and
warrants for
individual
Mainland
enterprises
A total of US$230 billion raised in the past
ten years
Since 1993, US$113 billion of equity capital
(49% of total) raised by Mainland enterprises
listed in Hong Kong
2003
H-shares
Index
Futures
launched
2004
H-shares
Index
Options
launched
H-shares Index
Futures an early
success (>7,000
contracts a day)
8
Mainland enterprises listed in HK are subject to market
discipline in accordance with international standards
Areas subject to
market discipline
Corporate
governance
Key elements
Code of Corporate Governance
Initial listing obligations
Continual listing obligations
Enforcement by regulators
International Accounting Standards; or
Accounting
Management
practices
Hong Kong Financial Reporting Standards
Compete with other internationally recognised
companies
9
Mainland China dimension of the Hong Kong securities
market
As at 31 Oct 2004 or Jan-Oct 2004
Listed issuers
Total HK
market
Mainland enterprises*
1,084
286
26%
769
226
29%
2.0
1.0
48%
58
33
57%
8.9
6.4
72%
Fund raised in secondary market
(US$bn)
21.5
4.2
20%
Total fund raised (US$bn)
30.4
10.6
35%
Market capitalisation (US$bn)
Avg daily turnover (US$bn)
# of new listings – equity
Fund raised by IPOs (US$bn)
* Includes H shares, red chips and private enterprises
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The 10 largest IPOs in HK since 1993 have all been by
Mainland enterprises
Largest IPO in
the world in 2003
Ranking
Company
Date of Listing
1
China Unicom
2000
2
China Mobile
1997
3
China Life
2003
4
Sinopec
2000
5
PetroChina
2000
6
BOC (HK)
2002
7
Ping An Insurance
2004
8
SMIC
2004
9
China Telecom
2001
10
CNOOC
2001
Capital Raised
(US$ bn)
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In 2003, 8 out of the 10 largest IPOs were Mainland
enterprises
Ranking
Company
1
China Life
2
PICC
3
Sinotrans
4
Hopewell Highway Infrastructure
5
China Resources Power
6
Weiqiao Textile
7
AviChina Industry & Technology
8
Great Wall Automobile
9
Fujian Zijin Mining
10
Lee & Man Paper Manufacturing
2003 Capital Raised
(US$ mil)
12
6 out of the 10 highest turnover HK-listed companies
are Mainland enterprises
Ranking
Company
1
HSBC
2
PetroChina
3
Hutchison Whampoa
4
China Mobile
5
Sun Hung Kai Properties
6
China Life Insurance
7
BOC (HK)
8
Cheung Kong
9
Sinopec
10
China Telecom
2004 Jan-Oct Turnover
(US$ bn)
13
6 out of the 10 highest net profit HK-listed companies
are Mainland enterprises
Ranking
Company
1
HSBC
2
PetroChina
3
China Mobile
4
China Telecom
5
Sinopec
6
Hutchison Whampoa
7
CNOOC
8
Cheung Kong
9
Hang Seng Bank
10
BOC (HK)
2003 Net Profit
(US$ bn)
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Agenda
1. Highlights of the Hong Kong Securities Market
2. Mainland China Dimension
3. HKEx Positioning
4. Conclusions
15
HKEx strategic vision
Goal
Operate a quality market through enhancing
regulation and market infrastructure in
accordance with international best practices
and standards
Focus on Hong Kong and Mainland China
Geographical focus
Business focus
Focus on core market operations:
- Listing
- Trading
- Clearing
- Information Services
- Market systems
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HKEx’s major 2004 achievements and 2005 initiatives
2004 Achievements
Enhance market
quality
Improve market
infrastructure
Enhance Mainland
business
development
Introduce more
Mainland products
2005 Initiatives
Enhanced corporate
governance standards
Support enshrining of key
listing rules in statute
Enhanced regulation of
Sponsors & IFAs
Facilitate simultaneous
listing of A & H shares
Maintained 100% uptime
for all market systems
Upgrade capacity of trading
systems
Launched integrated
derivatives system
Consolidate network for all
market systems
Strengthened Beijing Office
Promote listing of foreigncontrolled companies with
Mainland operations
Organised listing
promotional conferences on
the Mainland
Launched a number of
Mainland-related products
Launch additional
Mainland- related products
Expand information
dissemination in selected
regional markets
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Conclusions


Mainland finance sector and Hong Kong are in a win-win
situation which:
-
Encourages reforms within the Mainland enterprises
-
Contributes to development and prosperity of the Hong Kong
financial sector
To be successful, HKEx is committed to:
-
Focusing on developing the opportunities presented by Mainland
enterprises
-
Further enhancing market quality
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Thank you
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