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Sean Kennedy

HONG KONG'S foreign reserves held by the Exchange Fund totalled US$54.62 billion, including forward currency transactions, at the end of September, the Hong Kong Monetary Authority said yesterday.

  This represented a rise of almost 2 per cent on the previous quarter, said the authority, which is publishing Exchange Fund figures on a quarterly basis for the first time.

  'This brings us closer to international practice and underscores our commitment to greater transparency,' Joseph Yam Chi-kwong, the authority's chief executive, said.

  He said the authority had decided to disclose forward transactions that had yet to be settled.

  The fund's foreign reserves, including forward transactions, were up almost 11 per cent on the end of September 1994, when the reserves stood at US$49.37 billion.

  The reserves, including forward transactions were up almost 7 per cent on the end of 1994, when the equivalent figure was US$51.07 billion.

  At the end of 1993, the Exchange Fund's foreign reserves, including forwards, stood at US$44.82 billion.

  Excluding forward transactions, the assets were slightly lower at US$51.76 billion, down from US$53.63 billion, the authority said.

  Mr Yam said the third quarter included large draw-downs of fiscal reserves to meet seasonal deficits.

  After allowing for the amount withdrawn of HK$25.2 billion, the authority had continued to achieve a positive return on the fund, he said.

  The fund has been a consistent performer in managing its assets, outstripping most private sector fund managers over the first half of 1995.

  It turned in a respectable result for 1994 despite the downturn which followed the February 1994 rate increase by the Federal Reserve.

  Reading the United States Treasury market correctly helped the Exchange Fund report a hefty rise in net assets for the first half of this year.

  But the authority warned that it planned to take a cautious approach to the second half of 1995.

  Mr Yam said in August that the second half of 1995 might not be as favourable as the first half, adding: 'In fact, I think it may be much more difficult.'   He said people should not expect the fund to repeat its first half performance in the second half.

  The fund's assets rose HK$41.3 billion to HK$449.8 billion, up 10.1 per cent from the end of last year, and liabilities rose HK$17.1 billion to HK$297 billion, an increase of just 6.1 per cent over December 1994.

  At June 30, the fund's net assets stood at HK$152.8 billion at June 30, up a hefty 18.8 per cent.

  In 1994, the fund ended a difficult 12 months with a small rise in net assets, while the top 25 per cent of the territory's major funds ended the year losing more than 10 per cent of their value.



HK's foreign reserves held by Exchange Fund up 2 pc