This photo taken on June 9, 2022 shows Eddie Yue Wai-man, chief executive of Hong Kong Monetary Authority. (CALVIN NG / CHINA DAILY)
Hong Kong experienced no capital outflows after the American and European banking crisis erupted but the city’s financial regulators will continue to monitor any possible spillover on global financial markets.
Hong Kong Monetary Authority Chief Executive Eddie Yue Wai-man said it will still be difficult to judge investment performance in the next three quarters, depending on the trend of US interest rates and market expectations
Hong Kong Monetary Authority Chief Executive Eddie Yue Wai-man gave this reassurance when he attended the financial affairs panel meeting of the Legislative Council on Monday.
“The impact of the European and American banking problems on Hong Kong’s banking system is limited, and (there have been) no capital flows out of Hong Kong,” Yue said in the meeting. “Total deposits and Hong Kong dollar deposits rose 0.5 percent and 2.6 percent respectively in the first quarter.”
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The HKMA chief executive said that the Hong Kong foreign exchange market has continued to operate smoothly, adding that HKMA will pay attention to any possible spillover to gauge whether more bank problems will affect the commercial real estate sector.
Yue also referred to Hong Kong’s property market, saying property prices in the first quarter rebounded 5 percent year-on-year, and trading volume has been rising. Many developers have launched new properties, while the second-hand market has gone quiet. He reminded the public to pay attention to interest rate risks when buying properties and borrowing money.
The HKMA said its Exchange Fund has recorded increased investment income for two consecutive quarters. In the first quarter of this year, the Exchange Fund gained HK$97.9 billion ($12.47 billion) after it gained HK$73.4 billion in the previous quarter.
Bonds contributed the most, with bond investment income of HK$43.9 billion, compared with a loss of HK$34.7 billion in the same period of 2022.
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Hong Kong equities and foreign equities contributed investment income of HK$3.3 billion and HK$25.5 billion respectively. Both of them turned from losses to profits year-on-year, but fell by nearly 80 percent and nearly 19 percent quarter-on-quarter respectively.
Foreign exchange contributed investment income of HK$25.2 billion, an increase of about 84 percent year-on-year, and a sharp increase of six times quarter-to-quarter.
Yue attributed the rebound of the Exchange Fund’s result in the first quarter to improved sentiment in the Asian equities market because of the border reopening between the Hong Kong Special Administrative Region and the Chinese mainland.
He said it will still be difficult to judge investment performance in the next three quarters, depending on the trend of US interest rates and market expectations.