HONG KONG—Funds worth HKD $71.5 billion (US $9.2 billion) flowed into Hong Kong in April, said Hong Kong Monetary Authority (HKMA) chief Norman Chan Tak-Lam in a Legislative Council meeting on May 4.
The announcement followed an earlier warning that an inflow of hot money could lead to greater fluctuations in the stock market. Chan said the inflow was a result of the buoyancy of the stock market, corporate increase in demand for Hong Kong dollars to pay dividends, and a rise in mergers and acquisitions.
The Hong Kong SAR Government, the HKMA, and the banking sector are closely monitoring the inflow of hot money into the territory.
While the injection of money into the economy is comparable to the period following the announcement of the start of the “through-train” operation of the Hong Kong stock market last August, its frequency has definitely increased. Nevertheless, it has yet to reach the level of HKD $640 billion that was reached in 2008 and 2009 after quantitative easing in the United States.
Chan claimed that since 2008, over US $110 billion (HKD $900 billion) has moved into Hong Kong. He described the situation as very unusual and said he expected an outflow, albeit at a smaller scale, when U.S. interest rates began to normalize.
With the upcoming implementation of the Hong Kong-Shenzhen stock connect, following a similar arrangement between Hong Kong and Shanghai some time ago, Chan said there would be greater interdependency between the Hong Kong and mainland Chinese markets. He advised investors to gain a better understanding of the new arrangements and make necessary adjustments.
“The ups and downs of the local market would be greater, so investors would need to take extra caution and manage their risks properly,” Chan said.
Source of Funds Unknown
