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Enoch Yiu

The stock exchange plans to introduce overseas-listed index funds next year in the wake of strong investor support for the Tracker Fund, according to chief executive Alec Tsui Yiu-wa.

 Among the possible candidates were funds that tracked indices such as the Nasdaq-100 Index, the Standard & Poor's 500 Index, the Dow Jones Industrial Average in the United States, and the FTSE-100 Index in Britain, Mr Tsui said yesterday.

 'There are many index funds listed in the United States which are heavily traded by investors.'  Last month's successful initial public offering of the $33.33 billion Tracker Fund proved investors would support index funds, Mr Tsui said.

 In addition to the index-fund plan, Mr Tsui said the stock exchange was weighing methods to enlarge its product lines and services, such as expanding information services to investors.

 This could bring in substantial earnings via charges for real-time stock information in addition to company news.

 The expansion is needed because the exchange must continue to be profitable after its merger with the futures exchange and the three clearing houses to form Hong Kong Exchanges and Clearing in May, according to brokers.

 A profitable exchange would help ensure that the new entity's plan to list before September went smoothly, they said.

 Mr Tsui said the stock exchange would also negotiate with the National Association of Securities Dealers and the US Securities and Exchange Commission in the second half of next year on relaxing regulations governing the listings of Hong Kong companies on Nasdaq.

 With seven Nasdaq companies due to list in the SAR from February, the listings of Hong Kong companies in the US will be the next stage of co-operation between the two exchanges.

 Speaking at the stock exchange's year-end review, Mr Tsui said the market had re-joined the world's top 10, after falling to 11th place a year earlier.

 Market capitalisation stood at $4.18 trillion at the end of November, he said.

 As a result, the market replaced Madrid as the world's 10th-largest market behind New York, Tokyo, London, Paris, Germany, Toronto, Switzerland, Amsterdam and Italy.

 With a close of 16,833 points on the Hang Seng Index on Friday, market capitalisation had risen to about $4.6 trillion.

 The newly launched Growth Enterprise Market (GEM), which has seven listed companies, raised $1.58 billion as of December 23. It has a market capitalisation of $6.25 billion.

 The GEM's average daily turnover amounted to $164 million.

 Mr Tsui said he was not worried about the recent strengthening of the Hang Seng Index.

 Meanwhile, stock exchange senior executive director Lawrence Fok Kwong-man said the SAR's economy recovery would push more companies to list in order to raise funds.

 He said funds raised by newly listed companies next year could break the record $247.57 billion picked up by 82 companies in 1997. This year's 31 newly listed companies raised $93.68 billion.

 The Tracker Fund raised another $33.33 billion.

 The average price-earnings ratio of the 701 companies listed on the exchange reached a record 25.4 times on December 23, up from 10.66 times at the end of last year.

 Trading value to December 23 was $1.86 trillion, up 9 per cent from the end of last year.

 Average daily turnover was up 11 per cent to $7.65 billion.



More index funds to follow in successful steps of Tracker