According to statistics published today (31 August) by the Hong Kong Monetary Authority, excluding the deposits created by the initial public offering (IPO)-related loans, total deposits with authorized institutions remained virtually unchanged, while Hong Kong dollar deposits decreased by 1.3% in July 2021, mainly due to the withdrawal of deposits for loan repayments by corporate customers. In the year to end-July, total deposits and Hong Kong dollar deposits grew by 2.7% and 2.3% respectively.
Large-scale IPO activities at the end of June led to an increase in deposits that resulted in a high base effect. As these IPO activities ended and issuers returned application monies, total deposits dropped by 1.8% in July. Among the total, Hong Kong dollar deposits decreased by 4.9%, while overall foreign currency deposits increased by 1.4%. Renminbi deposits in Hong Kong remained virtually unchanged at RMB820.8 billion at the end of July. The total remittance of renminbi for cross-border trade settlement amounted to RMB627.1 billion in July, compared with RMB650.0 billion in June. It should be noted that changes in deposits are affected by a wide range of factors, such as interest rate movements and fund-raising activities. It is therefore more appropriate to observe the longer-term trends, and not to over-generalise fluctuations in a single month.
Excluding the IPO-related loans, total loans and advances edged down by 0.2% in July, but increased by 4.3% in the year to end-July. As IPO activities ended and customers repaid subscription loans, total loans and advances declined by 2.7% in July. Among the total, loans for use in Hong Kong (including trade finance) declined by 4.1%, while loans for use outside Hong Kong grew by 0.9%. The Hong Kong dollar loan-to-deposit ratio decreased to 83.7% at the end of July from 84.2% at the end of June, as Hong Kong dollar loans decreased at a faster pace than Hong Kong dollar deposits.
Hong Kong dollar M2 and M3 both decreased by 4.5% in July, but increased by 1.8% and 1.7% respectively compared to a year ago. The seasonally-adjusted Hong Kong dollar M1 declined by 0.4% in July, and but rose by 18.3% compared to a year ago, reflecting in part investment-related activities. Total M2 and M3 both decreased by 1.7% in July, but went up by 3.0% from a year earlier. Excluding the deposits created by the IPO-related loans, Hong Kong dollar M2 and M3 both decreased by 1.2% in July, but increased by 2.0% in the year to end-July; total M2 and M3 both edged up by 0.1% in July, and increased by 2.3% in the year to end-July.
As monthly monetary statistics are subject to volatilities due to a wide range of transient factors, such as seasonal and IPO-related funding demand as well as business and investment-related activities, caution is required when interpreting the statistics.
Hong Kong Monetary Authority
31 August 2021