The Hong Kong Monetary Authority (HKMA) announced today (Tuesday) the Hong Kong results of the Bank for International Settlements (BIS) triennial survey1 on the turnover2 of foreign exchange and derivatives. The BIS is also releasing the preliminary global results today, as are many of the participating economies.
In the global results, Hong Kong, as in the last survey in 2004, ranked sixth in the global foreign exchange market, and seventh if including transactions in the OTC derivatives market.
"The survey confirms that Hong Kong continues to build on its position as one of the world's major centres for foreign exchange and derivatives activities," said Mr YK Choi, HKMA Deputy Chief Executive. "Particularly notable from the survey is the significant increase in the trading volume of the Hong Kong dollar, due to the continuing sizeable inflow of capital to Mainland China through the Hong Kong foreign exchange market. This highlights Hong Kong's important position as a gateway for investment in the Mainland."
The Hong Kong results3 were broadly in line with global trends. A detailed analysis of the survey results together with country comparisons will be provided in the December issue of the HKMA Quarterly Bulletin. Set out below are the key findings for the Hong Kong market.
Net foreign exchange turnover
Net daily turnover of foreign exchange transactions increased strongly by 70.9% to US$174.6 billion in April 2007, compared with three years previously. Both spot and forward transactions4 increased. While spot transactions registered a moderate growth of 6.4% to US$37.9 billion per day, net daily turnover of forward transactions more than doubled to US$136.7 billion. Forwards were mainly foreign exchange transactions and a large proportion was of short maturity of less than 7 days. Hong Kong dollar against US dollar remained the most heavily traded currency pair in the local market.
Greater asset-management and hedge-fund activities in Hong Kong, an increase in bank treasury operations, and active carry trade activities were likely to have been the key factors behind the significant growth in these markets. Increasing China related activities through the Hong Kong foreign exchange market also stimulated growth.
Net over-the-counter derivatives turnover
Average daily net turnover of over-the-counter (OTC) derivatives (both foreign exchange and interest rate derivatives) rose by 58.2% to US$23.6 billion. Strong growth was seen in both foreign exchange derivatives and interest rate instruments, particularly interest rate swaps.
In contrast to the 38.2% decline in 2004, turnover in the Hong Kong dollar against the US dollar increased robustly by more than 1.5 times in 2007. Its share to total net turnover thus increased from 7.2% in 2004 to 10.7% in 2007. With regard to single-currency interest rate derivatives, Hong Kong dollar-denominated contracts rose by 2.3 times to account for the largest share of the net turnover in 2007 while other major currencies registered declines.
Annex
For further enquiries, please contact:
Peggy Lo, Manager (Press), at 2878 1687 or
Hing-fung Wong, Officer (Press), at 2878 1802
Hong Kong Monetary Authority
25 September 2007
1 The survey was conducted as part of a global survey of 54 economies co-ordinated by the BIS. The 54 participating economies are: Argentina, Australia, Austria, Bahrain, Belgium, Brazil, Bulgaria, Canada, Chile, China, Colombia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong SAR, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Peru, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United States and United Kingdom.
2 The turnover part of the survey comprised collection of data on gross turnover in notional amounts of foreign exchange spot, foreign exchange and interest rate over-the-counter (OTC) derivatives transactions in April 2007. Data were reported on a "locational" basis, i.e. based on the location of the sales desk of a deal.
3 In Hong Kong, 50 market participants (58 in 2004) took part in the survey, comprising 46 authorized institutions and 4 major securities houses.
4 Includes outright forwards and foreign exchange swaps.
