Hong Kong brokers tout lower costs for retail investors seeking to buy into Ant Group’s IPO after US$12.9 billion of inflows drags interest rate down
- Hong Kong Monetary Authority spent almost HK$100 billion (US$12.9 billion) intervening in the currency market 25 times since September 14
- The one-week interbank offered rate has fallen to 0.1 per cent from 2 per cent in March.
Hong Kong stockbrokers say they plan to offer lower interest rates to retail investors to buy shares in Ant Group’s upcoming jumbo initial public offering, after almost HK$100 billion (US$12.9 billion) of capital flowed into the city over the past four weeks.
Overseas investors are piling into Hong Kong ahead of Ant Group’s IPO, as they jostle for a piece of the offering. More than HK$98.27 billion has flowed into the city since September 14, forcing the city’s de facto central bank to intervene 25 times in currency markets to try to weaken the Hong Kong dollar.
Even after 25 interventions over the past 30 days, the Hong Kong dollar was trading at 7.7501 on Wednesday afternoon, which is close to the top end of a trading band with the US dollar that required the HKMA to intervene again. Hong Kong‘s dollar is pegged to the US dollar at 7.8, and the HKMA will intervene to make sure it trades between 7.75 and 7.85.
The capital inflows have boosted the so-called ‘Aggregate Balance’, the sum of commercial banks’ clearing and reserve accounts held at HKMA, to HK$304.57 billion, six times their level before the HKMA’s intervention in April.