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HK financial sector remains stable amid social unrest


Source: Global Times    Published: 2019-12-11

The months-long social unrest in the Hong Kong Special Administrative Region (HKSAR) has affected local economic development while the liquidity in the banking system remains robust, HKSAR Financial Secretary Paul Chan Mo-po said at a forum on Wednesday.

Considering the capital inflows and outflows, the performance of the stock market, the free exchange of the Hong Kong dollar and its Linked Exchange Rate System (LERS), Hong Kong's banking industry is still seeing stable growth, Chan said, local media reported.

The Hang Seng Index closed up 0.79 percent at 26,645.43 points on Wednesday.

The impact on Hong Kong's financial sector exerted by the social unrest, which has lasted nearly half a year, will take some time to emerge instead of becoming obvious immediately, Dong Shaopeng, an adviser for the China Securities Regulatory Commission, told the Global Times on Wednesday.

Dong said that the HKSAR government is able to deal with general fluctuations so far to keep local financial sector stable.

An IMF Staff Mission on December 4 commended the resilience of Hong Kong's financial system and the LERS despite a slowing economy, noting that a history of prudent macroeconomic policies has left Hong Kong with significant buffers to navigate through cyclical and structural challenges.

These buffers include sizeable foreign exchange reserves, a large net international investment position, banks' strong capital and liquidity buffers at levels well above international standards and large fiscal reserves, the mission said.

Since October, IPOs on the Hong Kong market have resumed as investors showed confidence in sectors such as medical treatment and property management, Alex Zhao, an employee of a Hong Kong-based investment bank boutique, told the Global Times on Wednesday.

E-commerce giant Alibaba was listed in Hong Kong on November 26.

Most investors are still confident about the Hong Kong capital market because of their trust in the local legal system, the sound capital liquidity and predictions that the recent unrest will not shake the city's position as a world financial center, Zhao said.

"Although the A-share market has embraced positive reforms, the Hong Kong capital market is still attractive to investors in the short term thanks to its relatively easier IPO rules and convenient methods of fundraising in US dollars," Zhao noted.

But if the chaos continues to dampen the city's business environment, the local financial industry can hardly escape from a slowdown or capital outflows, Dong said.

"It's high time for Hong Kong to guarantee a sound business environment through restoring public order," Dong said.

The local government has recently introduced fiscal stimuli to support the economy, including support for small and medium-sized enterprises, further tax relief, extra social security payments and subsidies for households.

Dong Shaopeng is senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.

Key Words: HKSAR   stock market   RDCY   Dong Shaopeng  

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