Hong Kong's International Financial Centre: Retrospect and Prospect

exceeded US$50 billion. With 78 companies tapping the booming market, 56 of which were
from the Mainland, Hong Kong ranked fifth in the world for the year. 43
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The market for IPOs in Hong Kong
Source: HK Exchange and SFC data; Lingnan University, Department of Economics, Report on Hong Kong as an
International Financial Centre for China and for the World, p. 43.
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IPOs will remain important even if the market for Mainland firms cools, but the most
promising investment banking franchises also provide local expertise and global connections
critical for companies contemplating mergers and acquisitions. They also sell advisory services
to corporate and individual investors with investment portfolios to manage. At present, the Hong
Kong Stock Exchange plays the dominant local role in making markets for those investors. It
ranks eighth in the world, with market capitalization in excess of US$ 1 trillion, and it offers a
full range of products, including futures and options. In this regard, Hong Kong has come a long
way from 1987, when the original Hong Kong Futures Exchange was debilitated by scandal and
crisis. In March 2000, it merged with the Stock Exchange of Hong Kong and the Hong Kong
Securities Clearing Company to form Hong Kong Exchanges and Clearing Limited. In this
sector, that private entity then became a leading self-regulatory organization, a subject to which
we return below.
For risk-tolerant investors, the Exchange established a second board, the Growth Enterprise
Market. (The innovation has now been emulated in Shenzhen.) At present, it is often likened to
43 Financial Times (London), 10 December 2010.
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