Hk & Shanghai Comparisions Essay

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The comparison of Shanghai and Hong Kong as competitors FINANCIAL SERVICES Hong Kong has a deeper pool of financial services than Shanghai with insurance, law, accounting and other professional service firms already well established. The services sector in Shanghai is expanding quickly but greatly lags Hong Kong with its industrial sector still contributing 46 percent of economic growth compared with just 8 percent in Hong Kong. STOCK MARKET Although Shanghai's stock market is worth more than Hong Kong's, with a market capitalization of $2.7 trillion compared with $2.3 trillion in Hong Kong, it has fewer listed companies. Hong Kong Exchange trades 1,297 stocks versus 869 in Shanghai. Shanghai's exchange is more focused on retail investors -- 85 percent of the trading involves retail, according to Tjun Tang of Boston Consulting Group. Without a large, stable base of institutional investors, the market is subject to higher volatility. China is encouraging more foreign institutional investors to participate, however. FUTURES MARKET Hong Kong has a mature and active financial futures market. It includes Hang Seng index futures -- which has over 11,000 contracts -- H Share index futures, interest rate futures and gold futures which started trading last year. Shanghai doesn't yet trade financial futures. It does have an active commodities futures market, though. It currently trades copper, aluminum, zinc, steel, wire rod, rebar, natural rubber, fuel oil and gold. It plans to launch stock index futures in the near future. FIXED INCOME MARKETS Hong Kong is far more active in global bonds than Shanghai, where international bond trading is still very limited. Hong Kong sold $11 billion of G3 currency bonds in 2009 compared with $982 million in Shanghai. However, domestic currency trading in Shanghai far surpasses that in Hong Kong, with Yuan trading much higher

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