Hong Kong intervenes to weaken currency as investors queue up for a piece of Ant Group’s mega IPO
- Stock exchange listing committee meeting to review Ant Group’s IPO application this month, sources say
- HKMA has intervened in markets eight times over the past eight days to sell HK$33.07 billion worth of Hong Kong dollars and to buy the same amount of US dollars
Overseas investors are piling into Hong Kong ahead of the mega initial public offering of China’s largest digital payments provider by volume, Ant Group, forcing the local currency higher, said brokers.
More than HK$33.07 billion (US$4.3 billion) of capital has flowed into Hong Kong since September 14, prompting the city’s de facto central bank to intervene multiple times in currency markets to try to weaken the Hong Kong dollar.
Ant, an affiliate of Alibaba Group Holding, which also owns the Post, is pursuing a dual listing in Shanghai and Hong Kong.
Hong Kong’s stock exchange, which prides itself on its efficiency, is working hard so that its approval process does not lag far behind Shanghai, one of the people familiar said. The listing committee is expected to hold a hearing on the case by the end of this month, people familiar with its thinking said.
The Hong Kong Monetary Authority (HKMA) has stepped into markets eight times over the past eight days to sell HK$33.07 billion worth of Hong Kong dollars and to buy the same amount of the US dollars, pushing the currency’s exchange rate below HK$7.75 per US dollar. This includes HKMA’s latest foray on Monday at HK$14.73 billion, which is the biggest single intervention this year, larger than the HK$13.4 billion intervention on July 9.
Ant is the biggest among a wave of blockbuster IPOs in Hong Kong this year, which has attracted HK$165.44 billion (US$21.34 billion) of capital inflows since April. HKMA has intervened in the market 48 times this year to tamp down the Hong Kong dollar.
The inflows have boosted the so-called ‘Aggregate Balance’, the sum of commercial banks’ clearing and reserve accounts held at HKMA, to HK$239.38 billion, four times the level before the HKMA’s intervention in April.
“Ant’s IPO is the main driver of the capital inflow. The aggregate balance in the banking sector has kept increasing, which means the money is staying and wait for a chance to invest,” said Bruce Yam, currency strategist at Everbright Sun Hung Kai. “The HKMA will need to continue its interventions as capital inflow will continue ahead of Ant Group’s IPO.”
