HK may have lost $6.8b of capital to S'pore: Bank of England, Latest Business News - The New Paper

HK may have lost $6.8b of capital to S'pore: Bank of England

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HONG KONG : The unrest in Hong Kong has led to as much as US$5 billion (S$6.8 billion) of capital outflow from investment funds in the Asian financial hub since April, the Bank of England said.

The flight of capital, which accounted for nearly 1.25 per cent of the region's gross domestic product (GDP), began after the city's government pushed for a Bill that would allow extradition to China, according to the central bank's Financial Stability Report released on Monday.

As protests against the Bill intensified and led to violent clashes, retail sales plunged, pushing the city into its first recession in a decade.

"These political tensions pose risks, given Hong Kong's position as a major financial centre," the report said.

The Bank of England monitors Hong Kong closely because UK banks such as HSBC and Standard Chartered are also the leading banks in Hong Kong. The banks have passed the Bank of England's stress test, which modelled a fall of almost 8 per cent in Hong Kong's GDP and a slump in property prices by more than half.

Analysts at Goldman Sachs said in October that US$4 billion of deposits might have left Hong Kong for Singapore between June and August.

However, the Hong Kong Monetary Authority has repeatedly said there are no apparent signs of significant capital outflows from the city. - REUTERS