banking & finance

US$4.66 billion surplus in January

The Hong Kong Special Administrative Region Government (HKSARG) had expenditures of US$24.64 billion and revenue of US$40.35 billion from April 2007 to January 2008, resulting in a surplus of US$15.71 billion. A US$4.66 billion surplus was recorded in January.

An HKSARG spokesman said the January surplus is mainly due to the collection of salaries and profits taxes. Taking into account the forecast financial results for February and March, the overall surplus for 2007-08 is expected to be US$14.82 billion.

The territory’s fiscal reserves stood at US$63.06 billion on January 31.

Exchange Fund totals US$186.03 billion

Assets of the Exchange Fund amounted to US$186.03 billion on January 31. This is US$4.37 billion higher than at end-December, according to the Hong Kong Monetary Authority.

The figure is included in the Exchange Fund Abridged Balance Sheet, which is released monthly with the Currency Board Account.

Foreign currency assets grew US$8.17 billion, while Hong Kong dollar assets dropped US$3.8 billion.

The rise in foreign currency assets is mainly due to valuation gains on foreign currency investments, interest and dividend income from foreign currency assets, purchases of foreign currencies with Hong Kong dollars and increases in Certificates of Indebtedness and repurchase agreements outstanding.

The decrease in Hong Kong dollar assets is mainly due to the sale of Hong Kong dollars for foreign currencies, and valuation losses on Hong Kong equities held by the Exchange Fund, which were partially offset by placements received from fiscal reserves.

The Currency Board Account shows the monetary base at end-January was US$43.38 billion, 5.7% more than the month before. The increase is due mainly to increases in market value of Exchange Fund bills and notes outstanding and Certificates of Indebtedness, the latter reflecting the seasonal demand for banknotes around the Lunar New Year. The tap issue of US$769.23 million of Exchange Fund bills during the month reflected a shift of funds from the Aggregate Balance to the Exchange Fund paper by about the same amount.

Backing assets grew 3.5% to US$47.41 billion. The increase is attributable mainly to the issuance of Certificates of Indebtedness in the monetary base, revaluation gains and interest from investments. These increases were partially offset by the transfer of assets out of the backing portfolio to the investment portfolio in accordance with the arrangement approved by the Exchange Fund Advisory Committee. Reflecting this, the backing ratio declined to 109.3% at end-January from 111.6% a month earlier.

Executive Director reappointed to SFC

Hong Kong Financial Secretary John Tsang has reappointed Alexa Lam as Executive Director of the Securities and Futures Commission (SFC) through February 28, 2011. Mrs. Lam assumed the post of Executive Director of policy, China and investment products with the additional title of Deputy Chief Executive Officer.

A government spokesman said the new post replaced Mrs. Lam’s prior post of Executive Director of intermediaries and investment products, which she held for six years. As Executive Director and Deputy Chief Executive Officer, Mrs. Lam now oversees the development of overall SFC policy, with an emphasis on Mainland China, as well as the regulation and approval of investment products.

Before joining the SFC as an adviser in 1998, Mrs. Lam had been a legal practitioner in Hong Kong and New York for more than 17 years and a visiting lecturer at the University of Hong Kong. 

Foreign currency reserves at US$160.3 billion

Hong Kong’s foreign currency reserves stood at US$160.3 billion at end-February, according to the Hong Kong Monetary Authority, up from US$159.9 billion at end-January.

Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at end-February also stood at US$160.3 billion, compared to US$159.9 billion at end-January.

Based on the latest published figures, Hong Kong is the world’s ninth-largest holder of foreign currency reserves, after mainland China, Japan, Russia, India, Taiwan, Korea, Brazil and Singapore.

The total foreign currency reserve assets represent approximately seven times the currency in circulation, or 38% of Hong Kong dollar M3.

HKMA receives banking award

The Hong Kong Monetary Authority (HKMA) was presented March 16 with The Asian Banker Award for Achievement in Regulation in the Financial Services Industry 2007. 

The annual awards program, organized by The Asian Banker magazine since 2005, recognizes individual excellence in the financial services industry. The award is based on a rigorous selection process chaired by David Eldon, chairman of the Dubai International Financial Centre Authority. 

“Under the leadership of its founding Chief Executive, Mr. Joseph Yam, the HKMA has become a world-class regulator that has helped Hong Kong establish its position as a highly respected and sophisticated regional financial hub,” Asian Banker said.

The judging panel noted the HKMA is the foremost authority in overseeing the development of advanced issues in banking such as the Hong Kong deposit protection program and the implementation of the Basel II supervisory framework. The assessment included the institution’s major achievements in the year under review, the quality of its regulatory reports, its vision and strategy and the operational guidance given by the institution to the financial industry.

Asian Banker added that the HKMA is viewed as the region’s most active regulator in supervising its banks in terms of active, on-the-ground issues. It is also the regional regulator that has the best understanding of using modern supervisory techniques to bridge the gap between big-picture macro issues and finer operational issues.
                                                                                   
Chow reappointed as HKEx Chief Executive

Paul Chow’s appointment as Chief Executive of the Hong Kong Exchanges and Clearing has been extended from May 1, 2009, to April 30, 2010. He was appointed Chief Executive and director May 1, 2003.

HKEx sees another profit record

Hong Kong Exchanges & Clearing (HKEx) saw record-high profit in 2007 for the fourth consecutive year.   The agency recorded an income of US$1.07 billion , up 102% year-on-year, with operating expenses up 17% to US$179.48 million. The profit before taxation amounted to US$923.07 million.

The increase in total operating expenses is mainly due to increases in staff costs and premises expenses driven by buoyant job and property markets, and by higher legal and professional fees.

Profit attributable to shareholders rose 145% to US$794.87 million. This is attributed to higher turnover-related income, higher net investment income and the one-off gain on disposal of an associate during the year.

The group’s total assets rose 117% to US$11.26 billion, with shareholders’ funds and net assets per share up 59% to US$1.07 billion and US$1, respectively.

In 2007, 82 new companies were added to the Main Board and two to the Growth Enterprise Market. Total capital raised, including post-listing funds, reached US$65.3 billion. In 2007, the number of companies listed on the Main Board and Growth Enterprise Market were 1,048 and 193, respectively.

The average daily turnover value on the Stock Exchange hit US$11.29 billion, up 160% compared to a year earlier. The average daily number of derivatives contracts traded on the Futures Exchange rose 71% to 171,440, while that of stock options contracts traded on the Stock Exchange grew 156% to 187,686.

Eight additional Exchange Traded funds were launched in 2007, of which seven tracked the performance of shares listed on the Mainland, as well as regional and overseas markets. The year saw 17 funds listed on HKEx, with total turnover of US$20.58 billion.