Supplementary Question on Legislative Council Meeting – Stability and development of the financial market

Q4 Stability and development of the financial market

MR CHAN CHUN:-YING (in Cantonese)

Deputy President, Secretary HUI has mentioned in the last paragraph of his main reply that “the Exchange Fund primarily invests in highly liquid foreign currency assets”. But generally speaking, after investing in foreign currency assets, a certain degree of currency hedging will be carried out to reduce the exchange risk. In this connection, while HKMA claims that it has been cautious towards investing in Hong Kong dollar assets, actually currency hedging can be carried out to turn investment in Hong Kong dollar stocks into investment in foreign currency assets. So, my question to the Secretary is this: When HKMA has been cautious towards investing in the Hong Kong stock market, does the reason purely have to do with the types of currency or is it because of the need to avoid the risk of over concentration in the local market?


Deputy President, regarding the direction of investment of the Exchange Fund mentioned by Mr CHAN, the major considerations are multi-faceted, and one of them is precisely concentration on the local market as pointed out by the Member just now.