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Hong Kong tells currency bears to watch out for mega IPOs as Kyle Bass capitalises on slump to tweet peg’s demise

  • Hong Kong’s currency weakened to a one-year-low of about 7.77 per US dollar on March 8 as local stocks slumped from February’s peak
  • Mega IPOs to be a magnet for capital inflows, just like in 2020 when US$50 billion entered the city and forced the biggest intervention since 2009: HKMA

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Eddie Yue Wai-man, Chief Executive of the Hong Kong Monetary Authority. Photo: Winson Wong
The Hong Kong Monetary Authority said the local currency’s weakness in recent weeks is a blip as sentiment on markets soured. Several large stock offerings could spur capital inflows and reverse the mini-slump.

That’s the message from Eddie Yue Wai-man, chief executive of the local de facto central bank, to currency peg doubters as the Hong Kong dollar lost 0.15 per cent against the greenback over the past three months, accelerating when the benchmark Hang Seng Index tumbled from its February 17 peak.

It’s an indirect response to Dallas-based hedge fund manager Kyle Bass, founder of Hayman Capital Management, who is tweeting about further capital outflows and the demise of the city’s 37-year-old linked exchange rate system.
“The Hong Kong dollar may be weakened for a while due to market sentiment issues,” Yue told local media in a briefing last week. “However, there are many upcoming IPOs such as Baidu and the homecoming of other US-listed mainland technology giants. The wave of mega IPOs will have a positive impact on capital inflows and will support the local currency this year.”
The local dollar weakened to 7.77 per dollar on March 8, according to Bloomberg data, a level not seen since March 13 last year. While the benchmark Hang Seng Index only fell by 7.5 per cent, technology bellwethers that powered bullish tones at the turn of the new year have corrected even more into bear-market territory with a 22 per cent retreat from their record-highs.
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