The Hong Kong Monetary Authority (HKMA) today (Tuesday) published its Annual Report for 2002. The Report explains the HKMA's work and achievements over the past year and sets out the challenges and objectives for the year ahead.
Mr Joseph Yam, the Chief Executive of the HKMA, said in his statement on the Annual Report that Hong Kong's economy began to recover in 2002, driven mainly by a strong rebound in external trade. Mr Yam cautioned, however, that the global outlook continued to be uncertain, and the outbreak of atypical pneumonia in the spring of 2003 would undoubtedly have a negative impact both on Hong Kong and on other economies.
In his statement, Mr Yam also observed that, against a background of domestic difficulty and considerable volatility in world markets, the Hong Kong dollar had remained stable during 2002, despite concerns about the impact of the Government's fiscal deficit on the Hong Kong dollar forward market. Confidence in the Link had been reinforced during the year by statements from the Hong Kong SAR Government that it had no plans to change the Linked Exchange Rate system.
Mr Yam noted that Hong Kong's banking sector continued to perform well in 2002, despite the economic difficulties facing the community as a whole. Retail banks' profitability generally held up well, overall asset quality improved, and capital adequacy remained well above international standards.
"The ability of banks to weather the extended period of economic difficulty so well says a great deal about their robustness and effective management," said Mr Yam.
Major achievements were made in 2002 in the development of Hong Kong's financial infrastructure. "Hong Kong's financial infrastructure continued to operate with 100% efficiency and reliability. The US dollar clearing system is becoming a facility for the whole region and is thus serving its purpose of improving settlement and reducing settlement risk in the Asian time zone," said Mr Yam. The successful development of Hong Kong's euro clearing system, which was launched in April 2003, and the introduction of expanded features and international linkages of the Central Moneymarkets Unit would further promote Hong Kong's role as an international financial centre.
The Annual Report contains the audited Exchange Fund accounts for 2002. The investment return on the Fund in 2002 was 5.1%, which was 120 basis points higher than the return on the benchmark set for the Fund by the Exchange Fund Advisory Committee.
Mr Yam commented that the conclusion of Exchange Fund Investment Ltd's work in disposing the greater part of the Hong Kong equities purchased by the Exchange Fund in August 1998 during the Asian Financial crisis, without disruption to the market and with considerable profit to the Exchange Fund, marked the end of an important and controversial chapter in Hong Kong's monetary history.
Mr Yam noted that the HKMA had made considerable cost savings in 2002. "The volume and complexity of our work has increased considerably, yet we cut staff by 5% and administrative expenditure by 9% during 2002 and we expect to achieve more savings in the year ahead," Mr Yam observed.
The Annual Report assesses the economic and banking environment in Hong Kong in 2002 and provides an overview of the HKMA's achievements in maintaining monetary stability and banking stability, and promoting market infrastructure in Hong Kong. It also provides an account of the HKMA's work in promoting Hong Kong as an international financial centre and in reinforcing its transparency and accessibility to the community.
A number of enhancements are introduced in this Annual Report. A new section, "About the HKMA", describes the functions and responsibilities of the HKMA. The Annual Report also makes reference to documents and other materials available on the HKMA website www.hkma.gov.hk by providing navigation guides.
A Summary Report is available along with the HKMA Annual Report for 2002. The full text of the Annual Report is also available, in interactive and bilingual form, on the HKMA's website at http://www.info.gov.hk/hkma/ar2002/eng/cover/cover.htm.
The HKMA Annual Report for 2002 is available for sale at the Government Publications Centre and from the HKMA at HK$100 per copy.
For further enquiries, please contact:
Sylvia Yip, Manager (Press), at 2878 1687 or
Thomas Chan, Senior Manager (Press), at 2878 1480
Hong Kong Monetary Authority
29 April 2003
