Hong Kong’s central bank should work as hard as the city’s tycoons in their chase for financial returns

For Hong Kong’s de facto central bank, the draw of China is proving too tempting to resist.

The Hong Kong Monetary Authority (HKMA) has for a decade diversified beyond traditional bond and equity investments, into private equity and real estate, as well as a little bit of infrastructure of late.

The so-called Exchange Fund is yet to partner with any of the Chinese state-owned enterprises that are driving Beijing’s infrastructure-investment push in more than 80 countries. But the possibility shouldn’t be ruled out, Yue said in a speech last week.

“We are here to create value — assess and select investment projects with prudence and a discerning eye, yet do not tie our own hands and pass up good opportunities,” he said.

While that may sound reasonable, it’s anything but. As my colleague Nisid Hajari notes, almost 15 per cent of China’s belt-and-road projects are already in financial trouble, and given the weak credit ratings of the countries involved, that number is bound to grow.