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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 KONG’s 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 investors’ risk appetite for the city’s 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 — which is obliged to buy or sell the local currency whenever it touches either side of the authority’s $HK7.75-$HK7.85 band against the US dollar — 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 Corporation’s $HK40bn takeover of Wing Hang Bank, as well as an active market for initial 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 China’s improving economy persuaded investors to snap up the city’s stocks, which are made up mostly of mainland Chinese companies.
Russia’s 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 China’s Huawei Technologies is its main equipment manufacturer was another factor in MegaFon’s decision.
FIONA LAW THE WALL STREET JOURNAL AUGUST 05, 2014 12:00AM
HONG KONG’s 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 investors’ risk appetite for the city’s 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 — which is obliged to buy or sell the local currency whenever it touches either side of the authority’s $HK7.75-$HK7.85 band against the US dollar — 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 Corporation’s $HK40bn takeover of Wing Hang Bank, as well as an active market for initial 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 China’s improving economy persuaded investors to snap up the city’s stocks, which are made up mostly of mainland Chinese companies.
Russia’s 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 China’s Huawei Technologies is its main equipment manufacturer was another factor in MegaFon’s decision.