Where shall we go and spend the money?

September 28, 2022 09:55
Photo: Reuters

Although everyone in Hong Kong is covered in a mask, it is easy to tell they are not smiling.

Why? People at the International Finance Centre in Central could tell that no one is making money in almost any asset class – stocks, bonds, real estate, gold and even cryptos – in the strong US dollar era.

And this week’s spotlight victim was British pound. Those with pound exposure -HSBC, CK Hutchison and the over 100,000 Hong Kong emigrants - would see the US dollar value of their assets go down by 20 per cent year-to-date as sterling fell to a historic low against the US dollar since 1971. One can also argue that some of them were able to sell their Hong Kong assets earlier at higher prices.

But for those who plan to leave Hong Kong would suddenly find themselves 20 per cent richer than they were had they decided to leave the city earlier.

Of course, not everyone is crying. The Hong Kong dollar peg can at least cheer the local outbound travellers. The new “0+3” arrangement without mandatory hotel quarantine spurs many of Hong Kong people who fancy outbound travel after a two-and-a-half year wait.

Who has not searched for international flights and started booking holidays over the weekend? Rightly so, the air-ticket price is not cheap but think of the favourable currency exchange advantage after a 25 per cent drop in yen year-to-date, followed by a 20 per cent drop in pounds, a 16 per cent drop in euros, a 15 per cent drop in Taiwan dollars and a similar level of decline in other South East Asian regional currencies.

Among the destinations, Singapore was probably the least favourable because Singapore dollar is the most defensive one with a mere six per cent drop this year.

The dollar peg, along with the 0+3 medical surveillance in travel restrictions, may keep foreign tourists from visiting Hong Kong.

Still, overseas Hong Kong people may start booking tickets to return for holidays in the perfect season for autumn hiking and Christmas shopping, if they do not mind the extra spending.

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EJ Insight writer