Hong Kong can turn Brexit challenges into opportunities, says CY Leung
The city’s financial institutions 'passed their stress test'
Chief Executive Leung Chun-ying has led top officials in expressing confidence Hong Kong can seize advantages while facing up to any financial turmoil triggered by the British vote to leave the European Union.
“I have every faith and confidence in Hong Kong business people and investors in turning challenges into new opportunities,” Leung told the Post in an exclusive interview.
“Just in the last couple of hours, I had a couple of phonecalls and emails from Hong Kong-based business people saying, now that the pound has devalued to a level that’s the lowest in about 35 years, real estate and shares in the UK, particularly London, have become very attractive because they are now that much cheaper.”
Leung said as long as they were not complacent and remained watchful of volatility, Hongkongers should be able to seize opportunities for themselves.
“I have every confidence in the UK economy. It has survived many challenges and has grown bigger and stronger despite them.”
Leung said the government and local financial regulators had prepared for the turmoil that saw the Hang Seng Index plunge nearly 1,000 points intraday while the pound plunged 12 per cent intraday.
“I am happy to say we are pretty well prepared for this outcome. The financial institutions in Hong Kong have passed their stress test; we have enough liquidity in the system,” Leung said. So far we are alright.”
Leung said while Hong Kong financial officials would exchange views with the mainland, they would handle it on their own.
“Managing the financial markets and economy of Hong Kong is very much part of the high degree of autonomy of the Hong Kong SAR government; so we don’t take instructions as such from Beijing.,” Leung said.
The city’s central banker, Norman Chan Tak-lam, had a similar message, saying the banking system was highly liquid and the financial system robust and resilient.
But the Hong Kong Monetary Authority chief also urged caution.
“The UK will negotiate arrangements for leaving the EU with Brussels in the months ahead,” he said. “The outcome is highly unpredictable, and will lead to great uncertainties. Hong Kong people should stand ready to cope with continued market volatilities and to manage their risks prudently.”
While the Exchange Fund was expected to take a hit in its investments in British property, Chan said the effect would be minimal.
Financial Secretary John Tsang Chun-wah said in Beijing that Hong Kong was bound to feel the impact of market volatility and uncertainty.
“We shall continue to monitor the situation closely,” Tsang said, noting that trade between the UK and Hong Kong was relatively small.
Yue Yi, vice-chairman and chief executive of Bank of China (Hong Kong) did not see significant damage to the city.
“Instead, Brexit may benefit Hong Kong as a leading offshore yuan centre. We should not worry too much about Brexit,” Yue said.
Britain is now the second-largest offshore yuan trading centre after Hong Kong, and analysts believe the vote will hurt London’s role because the UK can no longer act as an effective gateway to free trade with Europe.
CK Hutchison, which has invested heavily in telecommunications and infrastructure in the UK, said in a statement that it was “confident our UK businesses, which are strongly focused on providing vital goods and services to UK communities, will continue to thrive”.
Property tycoon Lui Chee-woo also did not foresee any significant change for Hong Kong’s financial and currency markets.