Monetary Statistics for January 1998

1. According to statistics published today (27th February) by the Hong Kong Monetary Authority, total deposits rose while loans and advances fell further in January 1998. Table 1 gives a summary and comparisons with earlier months.

Deposits

2. Total deposits increased by a modest 0.2% in January 1998, having risen by 0.3% in December 1997. HK$ deposits fell by 2.2%, while foreign currency deposits rose by 3.4%.

3. During the month, HK$ demand and savings deposits dropped by 11.2% and 9.4% respectively, while time deposits rose by 0.9%. The fall in demand and savings deposits was partly due to the long Chinese New Year holiday at around end-January, which reduced the transaction demand for money, and partly due to the seasonal demand for cash for "lai-see" during the Lunar New Year. In addition, as there was a renewed volatility in financial markets due to the Asian currency turmoil in January, the offering of higher time deposit rates by banks in response to tightened liquidity stimulated a switch from demand and savings deposits to time deposits.

4. During the month, US$ deposits rose by 4.9%, having increased by a modest 0.6% in December, while non-US$ foreign currency deposits rose by 1.8%, having fallen for three consecutive months.

Loans and advances

5. Total loans and advances fell by 0.4% in January. The fall was across-the-board. In line with the slowdown in economic activities across the region, offshore loans shrank by 0.8% and domestic loans contracted by 0.1%. Of the total credit for use in Hong Kong, loans for trade financing edged down by 0.5%, while other loans were virtually unchanged.

6. During the month, HK$ loans registered a decrease of 0.3%, following a rise of 0.7% in the previous month, while foreign currency loans contracted for three months in a row, falling by 0.4%. As HK$ deposits decreased at a faster pace than HK$ loans, the HK$ loan-to-deposit ratio rose to 115.5% at end-January 1998, from 113.3% at end-December 1997.

Money supply

7. HK$ M1 rose by 2.1% in January, as a 19.8% growth in cash held by the public stemming from the seasonal demand for currency for red packets more than outweighed the fall in demand deposits. Meanwhile, HK$M2 and HK$M3 were down by 0.9% and 1.0% respectively. In the twelve months to January 1998, HK$M1 dropped by 13.1% but HK$M2 and HK$M3 grew by 6.2% and 6.1% respectively.

Note to editor

8. For enquiries, please contact the Press and Publications Section, Hong Kong Monetary Authority. (Telephone number: 2878 8261)

Hong Kong Monetary Authority

28 February 1998

* Adjusted to exclude foreign currency swap deposits.

Note: Data may not add up to total due to rounding