HKMA warns on energy prices and AI investment risks
Hong Kong Monetary Authority chief Eddie Yue told lawmakers the global economy faces two risk points: rising energy prices and AI-related investments. He noted AI stocks fell sharply after the US midterm elections and that Hong Kong's third-quarter economic growth reached 5.2 per cent.
Hong Kong Monetary Authority (HKMA) chief Eddie Yue said the city's economy grew 5.2 per cent in the third quarter, with both investment and consumption rising. By the end of October, initial public offering proceeds had reached more than HK$380 billion, 1.4 times the total for the whole of last year, ranking second globally. Trading volumes remained steady.
Speaking at a Legislative Council financial affairs panel meeting, Yue said global monetary conditions continue to tighten. The US raised interest rates in September, and markets expect another increase in December or early next year. The US dollar has strengthened in recent months, raising financing costs for dollar-using companies.
He identified two global risk points: rising energy prices and investments related to artificial intelligence. Yue noted that AI stocks saw a significant decline overnight, which he linked to the US midterm elections.
On the mainland Chinese economy, Yue said third-quarter growth was slightly better than expected, with strong exports. However, investment fell compared with the previous two quarters, while consumption rebounded. Beijing has increased policy support, including new special loans for local governments and new policy tools.
Yue said the Hong Kong dollar exchange rate had weakened towards the weak-side convertibility undertaking level, as the interest rate gap between Hong Kong and the US exceeded 100 basis points, creating arbitrage opportunities. Demand for Hong Kong dollars related to stock market activity had also eased slightly, but he described this as normal and said the market was operating smoothly.
Property prices fell slightly by 0.8 per cent in the third quarter, with transactions dropping to just over 13,000. Yue attributed this to uncertainties including interest rates and the situation in the Middle East.