HKMA refutes capital flight

Business | Bloomberg and Avery Chen 3 Jun 2020

A jump in Singapore bank deposits could reflect investors' risk aversion and inflows from markets including Hong Kong given the country's status as a private banking hub, but Hong Kong Monetary Authority said there's still ample liquidity in the market and it is not seeing any capital flight.

Foreign-currency deposits at local banks almost quadrupled from a year earlier to a record S$27 billion (HK$149.24 billion) in April, figures from the Monetary Authority of Singapore showed. Deposits from non-residents rose 44 percent to S$62 billion, the highest level since records began in 1991.

"Rising tensions in Hong Kong, starting with protests last year and the announcement of a national security law last month could potentially cause flows to Singapore if Hong Kong's status as a financial center is threatened," said Diksha Gera, a banking analyst at Bloomberg Intelligence.

HKMA chief executive Eddie Yue Wai-man said the Hong Kong currency market had operated normally in the past few days, interest rates remained low, Hong Kong dollar and deposit kept stable, indicating there was no significant capital outflow, he wrote in his blog yesterday.

He said the linked exchange rate system is the keystone of the local monetary and financial system, which wouldn't change due to foreign policies toward the SAR.

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