Homepage
PR Newswire
04-08-2014, 10:34 PM
Cash flow bolsters Hong Kong dollar
FIONA LAW THE WALL STREET JOURNAL AUGUST 05, 2014 12:00AM
HONG KONGâs de facto central bank injected $HK65.1 billion ($9bn) into the foreign exchange market in July to defend the local currency peg to the US dollar as foreign funds continued to pour into the city to feed a hunger for Chinese assets.
Funds have been flowing into Hong Kong, which offers foreigners an easy way to tap Chinese stocks and bonds, at a faster pace than in late 2012, when the Hong Kong Monetary Authority last intervened as investorsâ risk appetite for the cityâs stocks rose.
At that time, the Monetary Authority pumped $HK107bn into the forex market from October to December in a bid to cool the Hong Kong currency. The latest intervention totalled more than half that amount in just a single month.
The HKMA â which is obliged to buy or sell the local currency whenever it touches Âeither side of the authorityâs $HK7.75-$HK7.85 band against the US dollar â said it attributed the strength of the Hong Kong dollar to company dividend payments, cross-border merger and acquisition deals such as Oversea-Chinese Banking Corporationâs $HK40bn takeover of Wing Hang Bank, as well as an active market for Âinitial public offerings.
In July, the benchmark Hang Seng index recorded its best month since 2012, posting a 6.8 per cent gain and hitting a three-year high, as Chinaâs Âimproving economy persuaded investors to snap up the cityâs stocks, which are made up Âmostly of mainland Chinese companies.
Russiaâs second-largest mobile operator, MegaFon, has decided to keep about 40 per cent of its cash reserves in Hong Kong dollars because of global market instability and as the West imposes sanctions on Moscow in a bid to force President Vladimir Putin to end his support for separatist rebels in Ukraine, The Wall Street Journal reported this week.
The fact that Chinaâs Huawei Technologies is its main equipment manufacturer was another factor in MegaFonâs decision.
FIONA LAW THE WALL STREET JOURNAL AUGUST 05, 2014 12:00AM
HONG KONGâs de facto central bank injected $HK65.1 billion ($9bn) into the foreign exchange market in July to defend the local currency peg to the US dollar as foreign funds continued to pour into the city to feed a hunger for Chinese assets.
Funds have been flowing into Hong Kong, which offers foreigners an easy way to tap Chinese stocks and bonds, at a faster pace than in late 2012, when the Hong Kong Monetary Authority last intervened as investorsâ risk appetite for the cityâs stocks rose.
At that time, the Monetary Authority pumped $HK107bn into the forex market from October to December in a bid to cool the Hong Kong currency. The latest intervention totalled more than half that amount in just a single month.
The HKMA â which is obliged to buy or sell the local currency whenever it touches Âeither side of the authorityâs $HK7.75-$HK7.85 band against the US dollar â said it attributed the strength of the Hong Kong dollar to company dividend payments, cross-border merger and acquisition deals such as Oversea-Chinese Banking Corporationâs $HK40bn takeover of Wing Hang Bank, as well as an active market for Âinitial public offerings.
In July, the benchmark Hang Seng index recorded its best month since 2012, posting a 6.8 per cent gain and hitting a three-year high, as Chinaâs Âimproving economy persuaded investors to snap up the cityâs stocks, which are made up Âmostly of mainland Chinese companies.
Russiaâs second-largest mobile operator, MegaFon, has decided to keep about 40 per cent of its cash reserves in Hong Kong dollars because of global market instability and as the West imposes sanctions on Moscow in a bid to force President Vladimir Putin to end his support for separatist rebels in Ukraine, The Wall Street Journal reported this week.
The fact that Chinaâs Huawei Technologies is its main equipment manufacturer was another factor in MegaFonâs decision.
