HKMA warns capital outflows to continue

Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue Wai-man has warned that global capital outflow and geopolitical risks are the city’s biggest challenges for the next few years. Yue said they have already seen some capital outflow from the Hong Kong dollar market after the US Federal Reserve raised interest rates. He said the trend will continue as they are just at the beginning of the interest rate rise cycle. Yue’s warning underscored the unique position occupied by the world’s fourth-largest capital market, a quarter of a century since it ceased to be a British colony. The HKMA sits on the world’s seventh-largest foreign-currency reserves, a financial war chest that quintupled over 25 years to USD460bn at the end of May. The stock market’s value grew eightfold since 1997, while bond issuance ballooned by 20 times to USD400bn in 2021.