banking & finance

US$1.44 billion surplus recorded in October

The Hong Kong Special Administrative Region Government (HKSARG) had recorded a surplus of US$1.44 billion in October thereby reducing the deficit for the April–October 2008 period to US$4.78 billion. Expenditures of US$19.41 billion and revenue of US$14.62 billion were recorded for the period.

A HKSARG spokesman said that the improved financial results in October are mainly due to the collection of profits tax. It is expected that the deficit for 2008-09 will be higher than the original estimate of US$961.53 million due to the current financial position and economic outlook.

The territory’s fiscal reserves stood at US$58.41 billion as of October 31, 2008.

Exchange Fund totals US$171.61 billion

Assets of the Hong Kong Exchange Fund amounted to US$171.61 billion on October 31. This is US$11.24 billion lower than at the end of September 2008, according to the Hong Kong Monetary Authority.

Foreign currency assets decreased by US$6.43 billion and Hong Kong dollar assets decreased by US$4.8 billion.

The decline in foreign currency assets was due mainly to valuation losses on foreign currency investments, redemption of Certificates of Indebtedness and a decrease in repurchase agreements outstanding.  These decreases were partly offset by purchases of foreign currencies with Hong Kong dollars.

The decline in Hong Kong dollar assets was due mainly to valuation losses on Hong Kong equities held by the Exchange Fund, sale of Hong Kong dollars for foreign currencies, fiscal drawdowns and a decrease in bank borrowings.  These decreases were partly offset by an increase in the balance of the banking system.

The Currency Board Account shows that the monetary base at the end of October 2008 was US$46.51 billion, an increase of US$1.98 billion, or 4.5%, from the end of September 2008.  The rise was due mainly to increases in the Aggregate Balance and the market value of Exchange Fund Bills and Notes outstanding, which were partly offset by a decrease in Certificates of Indebtedness.

The Backing Assets increased by US$1.85 billion, or 3.8%, to US$50.76 billion.  The increase was attributable mainly to an increase in the Aggregate Balance and interest from investments.  These increases were partly offset by the redemption of Certificates of Indebtedness in the Monetary Base and revaluation losses from investments.  Reflecting this, the backing ratio declined from 109.85% at the end of September 2008 to 109.15% at the end of October 2008.

Foreign currency reserves at US$165.9 billion

Hong Kong’s foreign currency reserves stood at US$165.9 billion at the end of November 2008, according to the Hong Kong Monetary Authority, up from US$154.8 billion at end-October 2008.

Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of November 2008 stood at US$166 billion, compared to US$155.2 billion at end-October 2008.

Hong Kong is the world’s eighth largest holder of foreign currency reserves based on the latest published figures, after mainland China, Japan, Russia, Taiwan, India, Korea and Brazil.