The Legislative Council passed a resolution to amend the MPF scheme regulations. The Central People’s Government, the People’s Bank of China, the Agricultural Development Bank of China, the China Development Bank and the Export-Import Bank of China will be listed as “exempted authorities”. MPF constituent funds may Invest up to 30% of the funds in bonds issued by a single exempted authority or unconditionally guaranteed; in addition, MPF constituent funds can also invest all funds in bonds issued by the same exempted authority or unconditionally guaranteed and consisting of at least 6 different issuances. bond.
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This plan can mainly increase the demand for RMB bonds, upgrade the rating, and reduce the interest expense of future bond issuance. Since the Hong Kong Monetary Authority has admitted that it is discussing how to reduce the risk of US sanctions, even the Financial Secretary has stated that it is doing a good job in various risk control and The plan, if the assets are eventually frozen, or the SWIFT system is lost, pegged to the RMB and the reduction of US dollar assets, must be prepared early.
Officials expected to reduce US dollar asset dependence
It is believed that in the next six months, Hong Kong’s official policy is to try to reduce the degree of dependence on US dollar assets. MPF is a market product, and it will be one of the measures to reduce the impact. The most troublesome is foreign exchange reserves, in order to stabilize the value of the currency, it is necessary to hold dollars. Unless the Hong Kong Monetary Authority takes the initiative and changes to a basket of currencies, it is possible to reduce the risk of assets being frozen in the future. However, if you take the initiative, the financial market will inevitably fluctuate, which may trigger a crisis of confidence, which is definitely a double-edged sword. If you want to avoid this risk, holding bulk commodities is a way, because it can avoid exchange rate risk; the second is Hong Kong dollar assets, the worst is Hong Kong dollar cash, or if you don’t want to take the risk, holding more foreign currencies for hedging is a solution. .
Lu Zhiwei
This column is published every Friday