Singapore non-resident bank deposits up 23% in January, Hong Kong inflows dip

March 13, 2020

HONG KONG - Compared to their Asian peers, Singapore banks have been seeing more deposits - they increased by 23% YoY from non-residents in January 2020, according to the French banking group Natixis. In Hong Kong, net foreign portfolio inflows reduced in February and turned negative in March, driven by the escalated global coronavirus outbreak and the recent oil shock.

Natixis says that the fear from coronavirus has not only dampened market sentiment in Hong Kong - it has pressured equities and home prices as well as funding activities.

"The short selling ratio for the Hang Seng Index has edged up, together with the worsened global risk appetite illustrated by the VIX index. However, net inflows through Stock Connect in Hong Kong has been supportive."

Natixis says a weak dollar index has helped the HKD stay relatively strong, but the 12-month forward exchange rate is still expecting depreciation. "LIBOR fell more rapidly than HIBOR, widening the yield differentials and supporting the HKD." (ATI).