Massive capital flows into Hong Kong in July were largely due to investors jockeying for position ahead of cross-border stock trading expected to start in October, government broadcaster RTHK reported Tuesday.
The Hong Kong Monetary Authority (HKMA) has handled more than US$9 billion of capital inflows since July. In the first 20 days of the month, these were related to real economic activity such as mergers and acquisitions and dividend payment by listed companies, HKMA chief executive Norman Chan was quoted as saying.
Most of the money has found its way into the stock market in anticipation of the start of stock trading between the Hong Kong and Shanghai exchanges, he said.
In addition, fund managers are becoming more positive toward China and are reallocating capital to Hong Kong equities and mainland stocks, he said.
More than US$100 billion of capital has entered Hong Kong since 2008 and could exit any time soon, Chan said.
However, he ruled out any dramatic outflows given the market outlook.
Meanwhile, Hong Kong banks saw their mainland-related lending hit HK$2.87 trillion (US$466 billion) at the end of March, up 10.8 percent from the end of 2013.
Chan said overall lending in Hong Kong is slowing and could continue to be patchy in the second half.
“It remains unclear if the property market uptrend will continue. The government will wait a while before taking any new measures,” he said.
The government may consider further tightening measures to lower credit risk for banks if the property uptrend continues.
In mid-June, the HKMA organized a drill with the banking community to prevent potential business disruption from a planned civil disobedience by the Occupy Central movement, Chan said.
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