September 20, 2019
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Worried Hong Kong residents are moving money out as protests escalate

By Steven Russolillo, Joanne Chiu and Eli Binder

Madrid, Aug 18 (efe-epa).- Money is leaking out of Hong Kong as months of protests raise concerns about the city's future, according to a report from Dow Jones Newswires supplied to Efe Sunday.

The local currency has weakened rapidly since early July, a move analysts attribute partly to outflows. Some businesses say they are seeing money move abroad, and several individuals who spoke to The Wall Street Journal said they have either swapped money into other currencies or are considering doing so.

Sarah Fairhurst, a 52-year-old partner at the Lantau Group, an economic consulting firm, said she transferred 200,000 Hong Kong dollars (about $25,500) into British pounds last week because of concerns about the protests.

"It's very unsettling here," said Ms. Fairhurst, who has lived in Hong Kong for 12 years. She said seeing videos of police using tear gas near her office have made her particularly nervous. "I don't know what's going to happen, but I know that I don't want my money trapped here."

Retail, tourism and business confidence have all suffered, and the city's stock and property markets are under pressure. The extradition bill that sparked the unrest, and the months of clashes that have followed, have together raised questions about the city's future as one of the world's largest international financial hubs, and how much autonomy it can maintain in its dealings with Beijing.

Ken Cheung, chief Asian foreign-exchange strategist at Mizuho Bank, said the weakening of the Hong Kong dollar against the U.S. currency, despite their respective interest rates, was a worrying sign of capital outflows. He said a falling stock market could indicate some people were shifting money abroad.

The Hong Kong dollar has been pegged to its U.S. equivalent since 1983. The de facto central bank, the Hong Kong Monetary Authority, lets the U.S. dollar trade between 7.75 and 7.85 Hong Kong dollars, and buys or sells greenbacks to keep the currency pair within those bounds.

The Hong Kong dollar traded at 7.8399 Friday, near the weak end of the band, even though interbank borrowing rates in Hong Kong are higher than their U.S. counterparts, which would usually help buoy the currency.

The monetary authority said there was no noticeable outflow of funds from the Hong Kong dollar or from the banking system, based on their latest statistics and the financial-market situation, added the Dow Jones report.

Comprehensive official data on capital flows is available only with a delay of several months. And any outflows would follow many years of funds moving the other way. In March 2018 the monetary authority said the city had seen some $130 billion in inflows since the U.S. began quantitative easing, or loosening monetary policy by buying assets, in 2009.

For now, those moving money could be the minority. At least a dozen professionals who spoke to the Journal said they hadn't transferred any funds. A few expatriate workers said they already maintained bank accounts in their home currencies, meaning their position was already somewhat diversified.

Likewise, two Hong Kong hedge-fund managers said they don't think there has been a rush of money leaving the territory, based on discussions with their peers.

Others are less relaxed. Ming Chung, a 42-year-old who runs a business exporting building materials, said he dropped plans to buy a property in Hong Kong and instead invested HK$4 million, or about $510,000, into a U.S.-dollar insurance product.

"It's a safer investment as opposed to buying property in Hong Kong," Mr. Chung said. "Because of the protests, I don't trust the market." He said he was worried about the Hong Kong dollar's longstanding link to the U.S. dollar breaking and considered the latter a safer currency.

The monetary authority said the currency system had served Hong Kong well through many economic cycles. "We see no need and have no intention to change the system," it said.

TransferWise--a London-based company that facilitates international bank transfers, primarily for individuals and small businesses--said it has seen a significant pickup in outbound flows from Hong Kong since the protests began.

The ratio of money moving into and out of Hong Kong was fairlyconsistent until a few months ago but has climbed as protests in the city intensified. TransferWise said that for every $1 that customers moved into Hong Kong in August, about $2.64 left the city.

A TransferWise spokesman declined to disclose precise amounts but said most of the money that left Hong Kong went to bank accounts in the U.K., U.S., Singapore, Australia and countries in the eurozone.

Devadas Krishnadas, the chief executive of Singapore consulting firm Future-Moves, said some clients, including rich individuals and large enterprises, were moving both personal and investment capital out of Hong Kong. He said the driver was longer-term concerns about the financial hub, not the immediate unrest.

"What's moving the fastest is capital," he said, while it would take longer to move staff and offices.

Hoi Tak Leung, a 37-year-old tech lawyer in Hong Kong who previously lived in Australia, periodically sends money there to his parents and for his property investments. He said he is considering moving additional funds back because of the protests and the favorable exchange rate. "When there's decreased confidence, you think about alternatives," he said.

Ms. Fairhust, the economic consultant, said her company's management team rejected her recommendation to move some money to Singapore. "My two business partners think I'm being a bit too paranoid," she said. EFE-EPA

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