Deficit recorded

The Hong Kong Special Administrative Region Government recently announced its financial results for the two months ended May 31, 2009.

Expenditure for the period April to May 2009 amounted to US$5.28 billion with revenue of US$3.53 billion, resulting in a deficit of US$1.74 billion.

A government spokesman said the deficit for the period was mainly because some major types of revenue including salaries tax and profits tax are mostly received towards the end of a financial year.

The fiscal reserves stood at US$61.64 billion as of May 31, 2009.

Exchange Fund totals US$225.65 billion

Total assets of the Hong Kong Exchange Fund amounted to US$225.65 billion on May 31. This is US$14.7 billion higher than at the end of April 2009, according to the Hong Kong Monetary Authority.           

Foreign currency assets increased by US$12.57 billion, and Hong Kong dollar assets increased by US$2.12 billion.

The rise in foreign currency assets was due mainly to purchases of foreign currencies with Hong Kong dollars and valuation gains on foreign currency investments.  The rise in Hong Kong dollar assets was due mainly to an increase in the balance of the banking system and valuation gains on Hong Kong equities held by the Exchange Fund.  These increases were partly offset by sales of Hong Kong dollars for foreign currencies. 

The Currency Board Account shows that the monetary base at the end of May 2009 was US$88.5 billion, an increase of US$9.16 billion, or 11.5%, from the end of April 2009.  The rise was due mainly to an increase in the aggregate balance, which was partly offset by a decrease in Certificates of Indebtedness.

Backing assets increased by US$9.1 billion, or 10.7%, to US$94.08 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.  Reflecting this, the backing ratio declined from 107.13% at the end of April 2009 to 106.32% at the end of May 2009.

License granted to Chinese bank

The Hong Kong Monetary Authority granted a banking license to China Development Bank Corporation (CDB) under the Banking Ordinance, effective June 25.
CDB is a bank incorporated in mainland China and has maintained a local representative office in Hong Kong since 1999.  It is the fifth largest commercial bank in total assets on the Mainland. Following the granting of a banking license to CDB, the number of licensed banks in Hong Kong has increased to 145.

HKMA executive director appointed

The Hong Kong Monetary Authority announced that the Financial Secretary, following the advice of the Governance Sub-Committee of the Exchange Fund Advisory Committee, has approved the appointment of Dong He as HKMA executive director of research, with effect from August 7.  Mr. He, who will begin in his new position on Aug. 7, will also become the Director of the Hong Kong Institute for Monetary Research.

Mr. He, who holds a PhD in Economics from the University of Cambridge, previously worked with the World Bank and was a Senior Economist at the International Monetary Fund, before joining the HKMA in 2004 as a Division Head.  He has worked in the HKMA’s External and Research Departments and has published research on a range of economic matters, particularly the mainland China and Hong Kong economies.

Mr. He will replace Hans Genberg, who is retiring from the HKMA after serving as Executive Director (Research) since February 2005.

Chief Executive of the HKMA Joseph Yam said that Mr. Genberg's expertise in monetary and financial issues had made an important contribution to policy formulation through some very volatile periods, not least during the current financial crisis.  

HKEx committee members reappointed

The Hong Kong Financial Secretary has reappointed Professor Chan Ka-lok, Fong Hup and Edmond Lau as members of the Risk Management Committee (RMC) of the Hong Kong Exchanges and Clearing Limited (HKEx).  The appointments are for two years, effective July 1. The appointments were made under the Securities and Futures Ordinance.

The RMC was established in March 2000 with the statutory role of formulating policies on risk management matters relating to the activities of HKEx and its subsidiaries, for consideration by the Board of HKEx.

The RMC is chaired by Chairman of HKEx Ronald Arculli.  The other serving members of the RMC include Marvin Cheung, Benjamin Hung, Dr. Bill Kwok and Keith Lui.

Foreign currency reserves increase

Hong Kong’s foreign currency reserve assets amounted to US$207 billion at the end of June 2009, according to the Hong Kong Monetary Authority, compared US$205.1 billion at the end of May 2009.

Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of June 2009 stood at US$208.2 billion, compared to US$205.1 billion.

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$207 billion represent more than eight times the currency in circulation or about 47% of Hong Kong dollar M3.