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Return of the Exchange Fund decreased by nearly 28% year-on-year HKMA Yu Wai-man: The investment environment continues to be uncertain this year

2022-01-27T09:28:32.354Z


The Exchange Fund earned $170.5 billion last year, with a return of 3.6%, a decrease of nearly 28% year-on-year. The return performance was down from 5.3% in 2020 and 6.6% in 2019. Looking forward to the investment situation this year, the President of the HKMA, Yu Weiwen, pointed out that holding


The Exchange Fund earned $170.5 billion last year, with a return of 3.6%, a decrease of nearly 28% year-on-year. The return performance was down from 5.3% in 2020 and 6.6% in 2019.

Looking ahead to the investment situation this year, the President of the HKMA, Yu Weiwen, pointed out that persistent inflationary pressures and the monetary policies of major central banks are the keys.

He pointed out that if inflation is more persistent than expected, global central banks will accelerate the pace of interest rate hikes, which may trigger asset price volatility. In the past, European and American stock markets have risen sharply, and assets have reached "several high" levels. However, corporate earnings growth has begun to slow down, coupled with the new crown epidemic. The volatility virus still exists, making the investment environment more uncertain this year.

Yu Weiwen continued that if the investment sentiment reverses and debt interest rates rise sharply, it will bring challenges to the Exchange Fund. This year, it will be fully defensive and maintain liquidity, and continue to diversify investment.

When asked about its performance this year, he said "it's hard to tell", emphasizing that the Exchange Fund is a long-term investment and should be viewed from a long-term perspective, "looking at it for a long time."

Counter-cyclical measures will not change for the time being

In addition, the Federal Reserve has started to raise interest rates this year. If the Hong Kong-US interest rate gap widens, will it lead to capital running in Hong Kong?

Yu Weiwen pointed out that the Hong Kong dollar is pegged to the US dollar, and the long-term direction of Hong Kong interest rates follows the US interest rate. However, the actual interest rate trend is also affected by many local currency supply and demand factors. The aggregate balance of the Hong Kong banking system is currently about 360 billion yuan, and the liquidity is very abundant.

Referring to the experience in 2015, the US rate hike will lag the rise of Hong Kong interest rate, because the interest rate difference between the two places has to reach a certain level before attracting market participants to engage in interest rate arbitrage activities, "How much does the US interest rate increase make the Hong Kong interest rate rise? It depends on market participants' views on the direction of interest rates, but referring to previous experience, when the Hong Kong-US interest rate difference reaches 50 to 100 pips, market participants will arbitrage."

As for whether raising interest rates will impact the property market, Yu Weiwen said that in addition to interest rates, there are many factors that affect the property market, such as economic performance, housing supply and demand, etc. "It's not just interest rates that have a big impact."

He said that the HKMA will pay attention to the development of the property market. The current property market is stable and there is no cyclical reversal, so the counter-cyclical measures taken will not be changed.

Source: hk1

All news articles on 2022-01-27

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