Hong Kong dollar bank deposits fall the most since height of protests as coronavirus outbreak sparks outflow of funds

Deposits in the local currency suffered their biggest drop since August in February but analysts expect the tide will turn as ‘hot money’ flows in

The Hong Kong dollar exchange rate strengthened from 7.80 in February to around 7.75 since last week, the strongest for three years

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The coronavirus has cast a dark cloud over Hong Kong’s economy. Photo: May Tse

Published: 6:58pm, 31 Mar 2020Updated: 9:49pm, 31 Mar 2020

Hong Kong dollar bank deposits dropped 0.5 per cent in February, the most significant decline in six months as the coronavirus outbreak led to an outflow of funds.

But analysts believe the tide is about to turn.

Hong Kong dollar deposits are a crucial indicator of money flowing in and out of the city. They fell by HK$33.72 billion (US$4.35 billion) to HK$6.92 trillion in February, according to monthly statistics issued by the Hong Kong Monetary Authority.

“The Covid-19 outbreak has spread most widely in February in Hong Kong and China while the overseas markets were not so affected. This has led to some outflow from the city,” said Gordon Tsui, chairman of the Hong Kong Securities Association.

“The outbreak also led to only a few IPOs during February which has also led to a decline in Hong Kong dollar deposits.”

The drop in February followed a 1.1 per cent increase in January and a 2.9 per cent increase last year as a whole.

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