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Press Releases

Exchange Fund Figures as at end-June 1999 Announced

The Hong Kong Monetary Authority (HKMA) announced today (28 July) the unaudited consolidated balance sheet of the Exchange Fund as at the end of June 1999 (Annex 1). The figures, comprising the accounts of the Exchange Fund and its subsidiary companies, show that in the first half of 1999, total assets rose by 4.3% from HK$921.4 billion at the end of December 1998 to HK$961.1 billion at the end of June 1999. After deducting interest payable to the fiscal reserves, the accumulated surplus of the Exchange Fund increased by 10.1% from HK$242.3 billion at the end of December 1998 to HK$266.8 billion at the end of June 1999. An accompanying Statement of Valuation of the Hong Kong Equity Portfolio was also published (Annex 2), showing that the market value of the equity investments of the Portfolio at the end of June amounted to HK$216.8 billion.

In the first half of 1999, the investment income of the Exchange Fund was boosted by the strong performance of the equity markets, particularly in Hong Kong. The gains of the Exchange Fund from the equity markets were partially offset by the weakness in the OECD bond markets and by the strength of the US dollar against major currencies.

"The investment environment for the second half of 1999 remains difficult. As the outlook on US interest rates is uncertain, volatility in global markets and exchange rates may stay high," said Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority. "The HKMA will continue its prudent management of the Exchange Fund to seek a steady return in a risk-controlled manner in accordance with the guidelines set by the Exchange Fund Advisory Committee," he said.

The HKMA today also published figures released on a monthly basis in the Exchange Fund Abridged Balance Sheet (Annex 3) and Currency Board Account (Annex 4) for end-June. These figures comprise the accounts of the Exchange Fund only and do not include those of the subsidiary companies.

Total assets of the Exchange Fund increased by HK$25.4 billion in the month of June, from HK$927.6 billion at end-May to HK$952.9 billion at end-June. Both foreign currency assets and Hong Kong dollar assets increased, by HK$4.7 billion and HK$20.7 billion respectively. The increase in Hong Kong dollar assets reflects primarily appreciation in the market value of the Hong Kong equity portfolio.

Meanwhile, Currency Board Account figures released today showed that the monetary base at end-June was HK$196.5 billion, a decrease of HK$0.8 billion, or 0.4% from end-May 1999. The decrease was primarily due to a decline in the Aggregate Balance of HK$2.3 billion, which was partly offset by an increase in Certificates of Indebtedness of HK$1.1 billion.

The backing assets decreased slightly from HK$216.9 billion to HK$216.7 billion. The decline in US dollar assets backing the Aggregate Balance was largely offset by an increase in backing assets against Certificates of Indebtedness and net income and revaluation gains totalling HK$875 million. As a result, the backing ratio increased marginally from 109.95% at end-May to 110.30% at end-June.

Attachment

Annex 1 : Exchange Fund Balance Sheet

Annex 2 : Statement of Valuation of the Hong Kong Equity Portfolio

Annex 3 : Abridged Balance Sheet of the Exchange Fund

Annex 4 : Currency Board Account

Hong Kong Monetary Authority

28 July 1999

Last revision date: 1 August 2011
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