HK not hit by sub-prime woes: central bank

HK not hit by sub-prime woes: central bank
September 8th, 2007 · No Comments

(HONG KONG) Information provided by locally incorporated banks indicates that their aggregate exposure to the US sub-prime mortgage market will not have systemic implications for Hong Kong’s banking sector, according to Hong Kong Monetary Authority chief executive Joseph Yam.

In his weekly Viewpoint column published on the Hong Kong central bank’s website on Thursday, Mr Yam said, however, that banks and other market participants should watch for risks and uncertainties.

‘Thanks in part to comparatively slower development of the credit derivatives market in Hong Kong, the risk arising from exposure to securities and credit derivatives with a sub-prime component is closely monitored by banks in Hong Kong,’ he said.

‘While some in the market are hoping for more government intervention in the form of interest-rate cuts or government-sponsored entities buying more mortgage-backed securities to keep the market going, others are projecting that the US mortgage credit quality will weaken further in the second half of 2007 or even well into 2008 as more sub-prime adjustable-rate mortgages reset to higher floating rates.’

He said the outcome of the sub-prime mortgage problem and its effect on the global economy are still unpredictable, and market participants should watch developments closely.



Source: Xinhua (Business Times 8 Sept 07)