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Enoch Yiu

Hong Kong’s Exchange Fund, the war chest used to defend the local currency, is considering increasing its exposure to gold and other precious metals as part of the government’s push to develop the city into a gold trading hub.
Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue Wai-man said on Thursday that the Exchange Fund would continue to invest mainly in US dollar assets to support the Hong Kong dollar’s peg with the US currency.
Yue said the Exchange Fund could increase its allocation to gold, which currently accounted for only a small portion of its portfolio, but he did not disclose the scale or timing of any potential purchases.
The Exchange Fund, which had total assets of HK$4.463 trillion (US$569 billion) at the end of June, backs the issuance of banknotes and helps defend the Hong Kong dollar against speculative attacks.
The HKMA, the city’s de facto central bank, manages the Exchange Fund’s investments across Hong Kong and overseas equities, global bonds, overseas property, long-term projects and a small allocation to commodities.
“By increasing its buying of gold and other precious metals, the Exchange Fund would diversify risk within its investment portfolio,” Yue said at a media briefing on Thursday after announcing Hong Kong’s first base rate rise in three years.
He added that investing more in gold would align with the Hong Kong government’s five-year plan to develop the city into a major commodities trading centre and gold trading hub.
The plan for the Exchange Fund to increase its gold holding was unveiled by Chief Executive John Lee Ka-chiu in his annual policy address on Wednesday, alongside the city’s first five-year development plan.
Lee said the HKMA would consider investing more in local gold spot and futures gold markets, while also studying the transfer of the Exchange Fund’s physical gold holdings to designated vaults overseen by the Hong Kong Precious Metals Central Clearing Company as part of efforts to build a gold-trading ecosystem.
The Exchange Fund reported investment earnings of HK$134.7 billion in the first six months of this year.


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Hong Kong Monetary Authority chief executive Eddie Yue Wai-man. Photo: Edmond So

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A larger allocation to precious metals could improve diversification and align with the city’s gold hub strategy, says HKMA’s Eddie Yue


A larger allocation to precious metals could improve diversification and align with the city’s gold hub strategy, says HKMA’s Eddie Yue.


Exchange Fund weighs bigger gold holdings to support Hong Kong’s trading hub plan

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}A larger allocation to precious metals could improve diversification and align with the city’s gold hub strategy, says HKMA’s Eddie Yue

A larger allocation to precious metals could improve diversification and align with the city’s gold hub strategy, says HKMA’s Eddie Yue