Hong Kong dollar deposits and money supply slip moderately in August as IPO market dries up
- Hong Kong dollar deposits shrink 1.6 per cent month on month to HK$6.843 trillion in August
- M2 money supply falls by 1.5 per cent in August from a month earlier
Deposits and money supply fell moderately in August as few companies raised funds since market sentiment was hard hit by the ongoing anti-government protests, which are now in their 17th week, according to data released by the Hong Kong Monetary Authority on Monday.
Hong Kong dollar deposits shrank 1.6 per cent month on month to HK$6.843 trillion (US$872.8 billion), leading M2 money supply lower by 1.5 per cent from a month earlier. M3 fell 1.4 per cent.
“The decline in Hong Kong dollar deposits in August reflected in part the less buoyant fundraising activities during the month compared to July,” the HKMA said.
Money supply M2 refers to the sum of banknotes and coins held by the public plus savings and time deposits with licensed banks. M3 includes M2 plus deposits with restricted licensed banks and deposit taking companies.
When international investors bring money in the city to buy shares of initial public offerings, Hong Kong dollar deposits and money supply rises. The IPO market in August had its worst month since 2012. There was only one IPO that raised HK$130 million compared to 15 IPOs in July worth HK$1.65 billion.
The HKMA said that deposits had risen once again in the first three weeks of September, but did not give an exact number.