Ant’s record IPO refund causes Hong Kong’s dollar deposits to fall by HK$1 trillion in November, slows hot money inflow

Hong Kong dollar deposits decreased by over HK$1 trillion, or 12.6 per cent, to HK$7.34 trillion at the end of November

Total deposits in Hong Kong in the first 11 months still rose 6.3 per cent compared to 2019

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Ant Group refunded a record HK$1.3 trillion (US$167.7 billion) to 1.55 million retail investors in Hong Kong after its IPO was suspended. Photo: Bloomberg

Published: 10:07pm, 31 Dec 2020Updated: 11:25pm, 31 Dec 2020

The suspension of Ant Group’s jumbo IPO in November caused deposits in Hong Kong’s banking system to fall sharply during the month and led to a slow down of hot money inflow into the city, Hong Kong Monetary Authority data showed on Thursday.

Ant Group, which operates the popular payments app Alipay, refunded a record HK$1.3 trillion (US$167.7 billion) to 1.55 million retail investors in Hong Kong who had subscribed to its initial public offering after the deal was suspended less than 48 hours before trading was due to start.

The refund, equal to nearly half the daily local currency in circulation, led to deposits decreasing by over HK$1 trillion, or 12.6 per cent, to HK$7.34 trillion in November, according to the HKMA’s monthly statistics. Including a slight decrease in foreign currency deposits, total deposits in the banking system fell 6.8 per cent, to HK$14.66 trillion.

“As monthly monetary statistics are subject to volatilities due to a wide range of transient factors, such as seasonal and IPO-related funding demand as well as business and investment-related activities, caution is required when interpreting the statistics,” the HKMA said.

Capital inflow into Hong Kong surged from late August after Ant Group announced it was pursuing a dual listing. Photo: Edmond So

Despite the sharp fall in November, total deposits in the first 11 months of 2020 still rose 6.3 per cent, higher than the 2.9 per cent in 2019 as a whole.

The amount of money deposited in Hong Kong’s banking system surged for a fifth straight month in October when local currency deposits rose by 9.8 per cent during the month. The flood of liquidity in the banking system was a result of hot money flows as investors chased a series of eagerly anticipated IPO and secondary listings by Chinese firms in the city.

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