Foreign currency reserves at US$255.8 billion
Hong Kong’s official foreign currency reserve assets amounted to US$255.8 billion at the end of December 2009, according to the Hong Kong Monetary Authority, compared with US$256.3 billion at end-November 2009.
Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of December 2009 also stood at US$255.8 billion, compared with US$256.3 billion at end-November 2009.
Hong Kong is the world’s seventh largest holder of foreign currency reserves based on the latest published figures, after Mainland China, Japan, Russia, Taiwan, India and Korea.
The total foreign currency reserve assets of US$255.8 billion represent about 10 times the currency in circulation, or 55% of Hong Kong dollar M3.
US$2.29 billion surplus recorded in November
The Hong Kong Special Administrative Region Government announced its financial results for the eight months ended November 30, 2009.
There was a surplus of US$2.29 billion in November, reducing the deficit for the eight months ended November 30 to US$4.98 billion. Expenditure for the period amounted to US$23.35 billion, and revenue was US$18.37 billion.
A government spokesman said that the improved financial results in November were mainly due to the collection of profits tax. He added that revenue sources, including land premium and stamp duties, were expected to have a better result than was previously forecast for the year. The revised estimates for the current financial year will be published, along with the 2010-11 Budget, on February 24, 2010.
The fiscal reserves stood at US$58.39 billion as of November 30, 2009.
Exchange Fund amounts to US$286.58 million
Total assets of the Hong Kong Exchange Fund amounted to US$286.58 billion on November 30, 2009. This is US$25.26 billion higher than at the end of October 2009, according to the Hong Kong Monetary Authority.
Foreign currency assets increased by US$25.16 billion and Hong Kong dollar assets increased by US$102.56 million.
The rise in foreign currency assets was mainly due to purchases of foreign currencies with Hong Kong dollars, an increase in unsettled purchases of securities, and valuation gains on foreign currency investments. The rise in Hong Kong dollar assets was mainly a result of valuation gains on Hong Kong equities.
The Currency Board Account shows that the monetary base at the end of November 2009 was US$127.7 billion, an increase of US$13.42 billion, or 11.7%, from the end of October 2009. The rise in the monetary base was mainly due to an inflow of funds into the Hong Kong dollar.
Backing assets increased by US$16.85 billion, or 14%, to US$137.1 billion. The increase was attributable mainly to the rise in the monetary base, revaluation gains and interest from investments, together with the transfer of assets from the Investment Portfolio to the Backing Portfolio, in accordance with the arrangement approved by the Exchange Fund Advisory Committee. Reflecting this, the backing ratio increased from 105.21% at the end of October 2009 to 107.36% at the end of November 2009.
Government welcomes stock exchange report
The Hong Kong Special Administrative Region Government has welcomed the publication of the Securities and Futures Commission’s (SFC) report on the annual review of the performance of the Stock Exchange of Hong Kong Limited (SEHK) in its regulation of listing matters in 2008.
The SFC’s report looked at the SEHK’s operational procedures and decision-making processes in its regulation of listing matters, including those in respect of SEHK’s powers to make Listing Rules. It reviewed sample cases to see how the SEHK’s policies work in practice and to verify whether the SEHK’s practices follow its policies.
The report recommended that SEHK review how to make the information it discloses about its practices, procedures and decisions more readily accessible to both experienced market professionals and less-frequent users of its many disclosures.
A government spokesman said, “The administration welcomes SEHK to take measures to further improve public access to materials it issued in order to enhance transparency.
“The administration also notes that SEHK is taking new measures to canvass views from, and interact with, the market in order to engage the market at various stages of policy making for listing matters. We hope that such measures will strengthen communication between SEHK and the market, thereby facilitating the formulation of new Listing Rules,” the spokesman said.
“The conduct of the annual review represents ongoing efforts by the SFC and SEHK to enhance the regulatory regime for the securities market in Hong Kong,” he added.
Asian finance officials take action to safeguard global economy risks
The finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN) member states, along with China, Japan and Korea (ASEAN+3) and the Hong Kong Monetary Authority, announced the signing of the Chiang Mai Initiative Multilateralization (CMIM) Agreement on December 29. This followed the conclusion on all the main components of the CMIM at the ASEAN+3 Finance Ministers’ Meeting (AFMM+3) in May 2009 in Bali, Indonesia.
The CMIM will strengthen the region’s capacity to safeguard against increased risks and challenges in the global economy. The core objectives of the CMIM are:
- to address balance-of-payments and short-term liquidity difficulties in the region, and
- to supplement the existing international financial arrangements.
The CMIM, with a total size of US$120 billion, will provide financial support through currency swap transactions to CMIM participants facing balance-of-payments and short-term liquidity difficulties. Each CMIM participant is entitled, in accordance with procedures and conditions set out in the agreement, to swap its local currency with United States dollars for an amount up to its contribution multiplied by its purchasing multiplier.
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