A fundamentally different reality for Hong Kong’s financial market now compared to the late 1990s would mean «much more bullets» are required to effectively attack the peg, according to the Hong Kong Monetary Authority.
HKMA chief executive, Norman Chan, recently spoke at a Treasury Markets Association event expressing his confidence in Hong Kong’s financial market resilience against attackers of the HKD peg. He noted that although there had been some short sell positions against the HKD, sizes were not large.
«The financial market in Hong Kong is much bigger nowadays than at the time during the Asia financial crisis in 1998,» Chan said.
«The short sellers who want to attack the local currency would find they would need much more bullets to carry out the attacks, which would be too expensive for them to so. As such, the public does not need to worry about the short sellers’ attack [on] the peg as they would not be able to repeat what the short sellers were doing during the Asian financial crisis.»
No Major Outflows
Despite talk of ongoing outflows in Hong Kong, Chan reassured that the case was minor saying that no «massive amount of money» has been transferred out of the city.
«We have not seen any major capital outflow in recent months,» he said. «There are some clients asking about opening accounts overseas, but the private banks have not seen clients ask to transfer a massive amount of money out of Hong Kong. The local deposit numbers are holding up well.»
Even in IPOs, Chan underlined recent HKD strengthening against the dollar eld to improved market sentiment and the resumption of some mega listings in Hong Kong, such as logistic giant ESR Cayman and American-styled brewery Budweiser.
Lending Outlook
On home loans, Chan said that it was too early to loosen mortgage policies despite ongoing unrest adding that such a move would be pursued should «only if [HKMA] confirm there is a downward cycle of the property market».
And on borrowing, Chan turned his focus to the recent Fitch downgrade and shrugged off the impact.
«We do not see there would be a big impact on the cost of funding,» he said of the downgrade. «Hong Kong remains an international borrowing hub for companies. We would like to see the social order to return to normal.»
