Hong Kong’s economy is good, no worries

The United States has set off a trade war to suppress China, and the Asian market has been underperforming. Currently, funds flow from countries such as Asia to the United States. This year, the Asian market has hardly recorded positive returns. Although the Indian stock index has reached a new high, it has not affected the impact of its currency’s 8.89% year-to-date decline; other countries such as Indonesia, Thailand and South Korea have fallen. The US consumer confidence index recorded the highest in nearly 18 years. The Consumer Confidence Index of the Conference Board in August rose to 133.4, much higher than the market expectation of 126.6. The Fed is expected to raise interest rates again in September and December this year.

As the Fed maintains a gradual rate hike, it has raised interest rates seven times since the end of 2015. Hong Kong has not yet followed. The Hong Kong dollar interest rate is near the weak exchange guarantee and facing upward pressure. Although Hong Kong stocks have rebounded in recent days, the HSI has not yet turned positive in the year-to-date, funds have continued to flow out from Hong Kong, and the Hong Kong dollar exchange rate has continued to weaken. From April 12 to August 29, the HKMA has entered the market 25 times to maintain the exchange rate, and the cumulative purchase has reached about 955.63. In Hong Kong, the Hong Kong Monetary Authority has taken octaves in August and has taken over HK$33.127 billion.

Hong Kong and US interest spreads increase arbitrage

In addition to capital market capitalization, the US dollar Libor and Hong Kong dollar Hibor spreads allow for arbitrage activities. For example, traders earned the US dollar Libor market interest rate by exporting Hong Kong dollars to US dollars, which increased the depreciation pressure on the Hong Kong dollar exchange rate. The balance of the banking system in Hong Kong has been significantly reduced from approximately HK$179 billion to HK$76 billion. It is the lowest level since the financial tsunami in 2008. It has the opportunity to fall to the level of 50 billion to 60 billion yuan in September, which is 70% lower than the beginning of the year. However, the HKMA has confidence in the linked exchange rate system and can provide additional liquidity through the exchange of HK$1 trillion in Exchange Fund Notes if necessary.

The HKMA currently has foreign exchange reserves of US$431.9 billion. In addition, it holds HK$1.05 trillion of Exchange Fund Bills and Notes. In the Asian financial turmoil in 1997, the HKMA consumed $9.7 billion in foreign exchange assets to contain Soros. The sniper of international financial predators, accounting for about 10% of the foreign reserves at that time. After years of accumulation, the HKMA can now say that it has considerable ability to resist the pressure on the Hong Kong dollar exchange rate.

However, it does not rule out that the Hong Kong dollar has the opportunity to weaken again in the third and fourth quarters. The Fed continues to raise interest rates gradually. US stocks continue to hit new highs. At present, China and China are worried about foreign trade, the European economy is slowing down, emerging market currencies are depreciating, and outside the United States. Fund managers can only continue to tap the value in the US market, but unfortunately, emerging markets and other funds continue to flow into the United States to receive goods at a high level, all the way to push the dollar to continue to be strong, the Hong Kong dollar pressure or not yet completed.

Material P will not be significantly increased.

Due to the pressure of US dollar interest rate hikes and Hong Kong’s economic environment, Hong Kong’s major banks have raised their mortgage interest rate by 0.1 percentage points in early August, ending the environment of Hong Kong’s ultra-low interest rates in the past few years, but the second adjustment is relatively mild. The market generally expects the end of this year. There is an opportunity to raise the most favorable interest rate. The chance of a sharp increase is not big. It is difficult to make a significant impact on the property market. If the economy is good enough to drive the increase in salary next year, it will offset some of the impact of interest rate hikes; although the property price may temporarily slow down, The negative impact on the overall market is expected to be limited.