Hong Kong banks tap most funds since 2019 as stock demand soars

Hong Kong banks borrowed the largest amount of short-term cash in more than five years on Tuesday, as they sought to keep up with a booming demand for local equities.

The Hong Kong Monetary Authority — the city’s de-facto central bank — loaned out HK$5.5 billion through its discount window, the most since December 2019, according to data compiled by Bloomberg.

“The tightening of liquidity in Hong Kong is, in our view, driven by demand for Hong Kong equities,” said Wee Khoon Chong, a strategist at BNY. Liquidity “probably will stay tight in the near term as HK equities’ momentum continues.”

The lending comes as benchmarks for Chinese stocks traded in the city and Hong Kong equities have both outperformed global peers in the past month amid optimism over DeepSeek’s artificial intelligence capabilities. The rally has also been spurred by bets that China may be adopting a more business-friendly stance following a meeting between President Xi Jinping and prominent entrepreneurs.

Chinese mainland investors bought HK$22.4 billion worth of Hong Kong stocks on Tuesday, the biggest daily purchase since early 2021, according to data compiled by Bloomberg.

BLOOMBERG