People's Republic of China--Hong Kong Special Administrative Region Financial System Stability Assessment
People's Republic of China--Hong Kong Special Administrative Region: Financial System Stability Assessment

EXECUTIVE SUMMARY Hong Kong SAR's (HKSAR) financial sector is one of the largest and most developed in the world, ranking number one in the World Economic Forum Financial Development Index. The banking system, with assets of US$2 trillion and equivalent to 705 percent of GDP, is highly capitali...

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Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C International Monetary Fund 2014
Schriftenreihe:IMF Staff Country Reports Country Report No. 14/130
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Zusammenfassung:EXECUTIVE SUMMARY Hong Kong SAR's (HKSAR) financial sector is one of the largest and most developed in the world, ranking number one in the World Economic Forum Financial Development Index. The banking system, with assets of US$2 trillion and equivalent to 705 percent of GDP, is highly capitalized, profitable, and liquid. The securities markets are deep, liquid, and efficient, with total stock market capitalization of 1,000 percent of GDP. The insurance sector has high penetration (now ranked the second in Asia after Japan), and is well capitalized. The sector is very well regulated, with the capacity to withstand a diversity of shocks. While the financial sector faced significant stress during the early stages of the 2008 global financial crisis, market confidence recovered quickly, aided by the decisive measures adopted by the Hong Kong authorities to mitigate its impact.
The sector, however, faces major risks, which puts a significant premium on effective liquidity management, macroprudential oversight and microprudential supervision. The anticipated exit from unconventional monetary policy in the United States could increase capital market volatility and reduce system-wide liquidity. A correction of property prices, which now stand at historical highs, poses risks for both borrowers and banks. The increasing economic and financial integration between HKSAR and Mainland China offers considerable expansion opportunities, but, at the same time, generates significant spillover risks, especially if a significant financial disruption or economic slowdown were experienced. Stress tests suggest that banks are well positioned to absorb a significant realization of risks.
Banks' aggregate capitalization would remain well above the Basel III's minimum capital requirement, and the banking sector (including foreign branches) has sufficient liquidity to withstand large deposit and wholesale funding withdrawals. At the same time, the tests highlight that a few smaller banks might be slightly more vulnerable under a severe economic scenario, and, reflecting the nature of their businesses, foreign branches are relatively more sensitive to withdrawals of wholesale funding. This underscores the need for continued vigilance in these areas. The authorities have actively deployed macroprudential policies to mitigate systemic risks. In particular, in the face of a doubling of house prices, the Hong Kong Monetary Authority (HKMA) introduced tighter limits on loan-to-val ...
Beschreibung:1 Online-Ressource (44 p)
ISBN:1498313213
9781498313216

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