The BRICS Securities and Derivatives Markets - Hong Kong ...

More documents

Recommendations

Info

The BRICS Securities and Derivatives MarketsIn Hong Kong, the Securities and Futures Commission (SFC) is the securities andderivatives market regulator while the Hong Kong Monetary Authority (HKMA) is thefrontline regulator of banks which conduct securities and futures businesses.5.1 Securities marketOf the exchanges in the China/Hong Kong markets, only HKEx is currently a member of theBRICS Exchange Alliance. It operates a Main Board and the Growth Enterprise Market(GEM). Listed securities include equities, equity warrants, derivative warrants, CallableBull/Bear Contracts (CBBCs) 10 , debt securities and funds (including ETFs). Clearing andsettlement is performed by the Hong Kong Securities Clearing Company (HKSCC) on animmobilised basis. Securities registration is performed at the share registrars.On the Mainland, the SHSE operates a Main Board while the SZSE operates a Main Board, aSmall and Medium sized Enterprise (SME) Board (launched on 24 June 2004) under the MainBoard, and a separate board, ChiNext, for growth enterprises (launched on 30 October 2009).Listed securities on the SHSE and SZSE include equities, government bonds, corporate bonds(including convertibles), equity warrants, investment funds (including ETFs) and bondrepurchases. Securities clearing, settlement and registration is performed by the ChinaSecurities Depository & Clearing Corporation (SD&C) 11 in electronic book-entry form asthe Mainland securities market is already dematerialised.The Mainland securities market is partly opened to foreign investors through the QualifiedForeign Institutional Investor (QFII) scheme for investment in A shares and through thespecialised equity product, B shares, which are traded in foreign currencies. The investmentof QFIIs is subject to authorised investment quota controlled by the Mainland Government.B shares were originally designed for foreign investors but were subsequently opened todomestic residents in February 2001. The Hong Kong market, on the other hand, is an openmarket without restriction on investor participation and fund flows.The Hong Kong market and the Shanghai market have comparable market size by value oflisted companies while the Mainland markets have higher turnover value. Figure 5-1 showsthe trend in market capitalisation and turnover for the three markets in the past decade. As atthe end of 2011, the market capitalisation of HKEx was US$2,258 billion and that of theSHSE was US$2,355 billion. Among the three, the SHSE has the largest average dailyturnover value (US$30 billion in 2011 vs US$13 billion for the SZSE and US$9 billion forHKEx) while the SZSE has the highest equity turnover ratio (227% in 2011 vs 160% forSHSE & 69% for HKEx).1011CBBCs are a kind of structured product issued by a third party, usually an investment bank, that tracks theperformance of an underlying asset without requiring investors to pay the full price required to own theactual asset.SD&C is the securities central clearing house established by the two exchanges, which operates two branchcompanies in Shanghai and Shenzhen to serve the respective markets.- 20 - Research & Corporate Development, HKEx31 December 2012
Equity market capitalisation (MC)Total market turnover value (TV)The BRICS Securities and Derivatives MarketsUS$bn4,0003,500Figure 5-1.Equity market capitalisation and total market turnover valueon SHSE, SZSE (2002 and - 2011) HKEx (2002 - 2011)Equity market capitalisation and total market turnover value on SHSE, SZSE & HKEx7,215US$bn8,0007,0003,0006,0002,5002,0001,5001,0002,3552,2583,0662,2091,0545,0004,0003,0002,0005001,00002002 2003 2004 2005 2006 2007 2008 2009 2010 2011SHSE TV SZSE TV HKEx TVSHSE MC SZSE MC HKEx MC0Source: Monthly statistics of SHSE amd SZSE, HKEx Fact Books 2002-2011.Figure 5-2 shows the trading composition by type of security on the markets. Securitiestrading on the SHSE is contributed almost equally by equities and debt securities while thaton the SZSE is dominated by equities. A significant proportion of HKEx’s securities tradingis contributed by structured products including derivative warrants and CBBCs.Trading composition by security type on SHSE, SZSE and HKEx(2011)Figure 5-2. Trading composition by security type on SHSE, SZSE and HKEx (2011)US$55 bn (1%)US$46 bn (1%)US$55 bn(2%)US$89 bn(3%)US$577 bn(26%)US$3,770 bn(52%)US$2,922 bn(95%)US$1,554 bn(70%)Total (US$bn)SHSE 7,215SZSE 3,066HKEx 2,209US$77 bn(4%)US$3,344 bn(46%)Equities Debt securities Funds Structured productsSource: Monthly statistics of the respective exchanges.- 21 - Research & Corporate Development, HKEx31 December 2012
Page 1 and 2: THE BRICS SECURITIES AND DERIVATIVE
Page 3 and 4: Contracts (million)CME GroupKorea E
Page 5 and 6: Market capitalisation / share tradi
Page 7 and 8: IBOVESPA daily closing (points)Futu
Page 9 and 10: The BRICS Securities and Derivative
Page 13: The BRICS Securities and Derivative
Page 18 and 19: SENSEX Index daily closing (points)
Page 22 and 23: Funds raised (FR) by NLCsNo. of new
Page 25 and 26: Equity market capitalisation / Equt
Page 29 and 30: Daily index closing (points)Futures

The BRICS Securities and Derivatives Markets - Hong Kong ...

Create successful ePaper yourself

Delete template?

Save as template?