With losses over the last three quarters, the total assets of Hong Kong's Exchange Fund continued to fall in October - by HK$87.7 billion, to HK$1,338.6 billion - the Monetary Authority's latest figures showed. The accumulated surplus also dropped by 14.2 per cent to HK$416.9 billion from a month earlier.
The city's de facto central bank attributed the reduction to a number of factors, such as a decrease in bank borrowings, a sharp decline in the stock market and unexpected fluctuation in foreign currency values.
Economist Andy Kwan Cheuk-chiu of Chinese University said: 'The value of assets will continue to fall throughout the remainder of the year, but the fall should not be as large as the HK$100 billion the market predicts.'
The government also said its financial position improved in October as income from profits tax began to roll in. The month saw an HK$11.3 billion surplus, which reduced the deficit from HK$48.6 billion in September to HK$37.3 billion.
The government predicted that the total deficit this year would be HK$7.5 billion.
Dr Kwan was not so optimistic. 'Income tax revenue will be much less than estimated,' he said.
'If the chief executive does not give out any further handouts in the coming months, it is estimated that the government will run into a deficit of around HK$50 billion to HK$60 billion. The original estimate of HK$7.5 billion in deficit can certainly not be achieved.
