Hong Kong Exchange Fund continues its comeback with US$12.5 billion gain after border reopening sparked market rally

Name: What is the Hong Kong Dollar Peg?
Uploaded: 2023-05-08T04:36:04.000Z
Duration: 1 min 43 s
Description: What is the Hong Kong Dollar Peg?

It is the best result since the second quarter of 2020 and follows a US$9.35 billion return in the final three months of 2022

Hong Kong’s gradual easing of Covid-19 restrictions from September before fully reopening borders in January, has revived economic and market momentum

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“Since the borders reopened earlier this year, the overall economy in Hong Kong has recovered well during the first quarter, driven by increasing consumption and an influx of tourists,” said HKMA chief executive Eddie Yue. Photo: May Tse

Enoch Yiu

Published: 12:36pm, 8 May 2023Updated: 3:01pm, 8 May 2023

Hong Kong’s Exchange Fund, the war chest used to defend the local currency, continued its comeback in the first quarter, posting a return of HK$97.9 billion (US$12.5 billion) on the back of rising stock markets after the city and mainland China reopened their borders.

It is the fourth best quarterly result since the authorities began reporting them in 2003, the best since the second quarter of 2020, which came in at HK$121.6 billion, and a turnaround from a loss of HK$48.8 billion in the same period a year ago, according to data provided by the Hong Kong Monetary Authority on Monday.

“Since the borders reopened earlier this year, the overall economy in Hong Kong has recovered well during the first quarter, driven by increasing consumption and an influx of tourists in the past several months,” said the de facto central bank’s chief executive Eddie Yue Wai-man during his quarterly meeting with the lawmakers on the financial affairs panel.

“The collapse of four US regional banks has added pressure to the markets but they have had no big impact to Hong Kong.”

The strong gains in the first quarter are a continuation of a recovery in the Exchange Fund’s investment performance, following a HK$73.4 billion return in the final three months of 2022.

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What is the Hong Kong Dollar Peg?

Hong Kong’s gradual easing of Covid-19 restrictions from September, before the full reopening of its borders with mainland China in January, has revived economic and market momentum.