Hong Kong’s Exchange Fund, which is used to back the local currency, posted an investment income of HK$52.8 billion (US$6.81 billion) in the third quarter, a drop of 56.6 percent from the previous quarter, the Hong Kong Monetary Authority (HKMA) said yesterday.
The figure compared with an investment gain of HK$23.5 billion a year earlier and a revised HK$121.6 billion investment income in the second quarter.
For the January-to-September period, investment income reached HK$62.4 billion, compared with HK$201.9 billion a year earlier.
While the fund saw gains on bonds of HK$83.2 billion in the first nine months, Hong Kong equities and foreign exchange recorded losses of HK$19.9 billion and HK$9.7 billion respectively.
“Hong Kong’s financial market and the Linked Exchange Rate System continue to operate effectively,” HKMA Chief Executive Eddie Yue (余偉文) said during a presentation at the Legislative Council of Hong Kong, reiterating that the system does not need to change.
Yue said the outlook for the fourth quarter is “very uncertain” and “very hard” to foresee, due to Brexit negotiation and the COVID-19 pandemic, which would drag down global economy in the short term, while the long-term impact could not be ignored.
Commenting on the US presidential election today, Yue said the outcome might be contested and cause market panic, but he was confident that Hong Kong’s robust financial system is well positioned to withstand such shocks.
The territory’s de facto central bank said it would continue to be defensive and put liquidity as one of the most foremost factors in consideration to preserve capital, but urged the public to manage risks.
The HKMA is the key manager of the Exchange Fund, which is under the control of the financial secretary and invests in equities, bonds, foreign exchange and other securities and assets.
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