...Financial Management EF 5143 Dr. Du Du Student Name and SID: Li Xing, 53680125 Lin Lin, 53834131 Chen Shu, 53684900 Zhang Rui, 95651546 Abstract The dollar- linked exchange rate system in HK was put into operation in 1983 and was always regarded as the footstone of stabilizing HK economy since then. However, 30 years later, great changes both inside and outside have taken place in Hong Kong. Now, a series of economic and social problems associated emerge with the Hong Kong's present exchange rate arrangement- linking HKD to USD. Is the dollar-linked exchange rate system still suitable for HK? Will the Hong Kong monetary authority have other better choices? In order to resolve the above questions, our report was divided into four main parts to analyze and discuss this issue. First, we discussed the reasons for choosing dollar- linked and also the disadvantages of linking HKD to USD that we assessed both in theory and fact. Then, we focused on the potential benefits of HKD linked with CNY before we analyzed the disadvantages. Later, we talked about a larger issue – dollarization and compared HK with Switzerland and Singapore before we came to our conclusions that HK should give up existed linking exchange rate system and adopt managed floating arrangement. Keywords: Linked exchange rate system, Hong Kong dollar, United State dollar, Chinese Yuan, Dollarization 1 Contents 1. 2. Background.................................................................................
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...The legal tender in Hong Kong is the Hong Kong dollar (HKD), Source: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikNNjn9t The legal tender in Hong Kong is the Hong Kong dollar (HKD), Source: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikNNjn9t The legal tender in Hong Kong is the Hong Kong dollar (HKD), Source: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikNNjn9t which is pegged to the US dollar at a rate of about 7.80 HKD to 1 USDSource: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikOBDEGm which is pegged to the US dollar at a rate of about 7.80 HKD to 1 USDSource: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikOSqV4B which is pegged to the US dollar at a rate of about 7.80 HKD to 1 USDSource: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikOSqV4B which is pegged to the US dollar at a rate of about 7.80 HKD to 1 USDSource: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikOSqV4B which is pegged to the US dollar at a rate of about 7.80 HKD to 1 USDSource: http://www.discoverhongkong.com/eng/plan-your-trip/practicalities/other-information/money.jsp#ixzz2ikOSqV4B which is pegged to the US dollar at a...
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...Should LERS be continued? On 23 and 26 OCT 2007, The Hong Kong Monetary Authority (HKMA) intervened TWO times in the market, for the first time since May 2005, to increase liquidity and curb the Hong Kong Dollar (HKD)’s strength. The interventions is very normal as the HKMA has already given the undertaking to defend the peg by buying US dollars (USD) and selling HKD simultaneously in order to settle the excess demand of HKD in public. The economy in USA turns bad due to the mortgage problems. (refer to table 6A1 and 6A2); An expansion of the qualified domestic institutional investors program (QDII) whereby mainland investors can buy Hong Kong Stocks; The upcoming Initial public offer (IPO) such as e-commerce portal Alibaba.com hold about Four thousand billion HKD (Table 6B: New listing Companies Statistic); The above three main factors associated heavy demand for the local currency, i.e. HKD. Table 6A.1 Global Mortgage-Backed and Asset-Backed Securities [pic] Sources: Thomson Financial According to data from Thomson Financial, the amount of newly issued mortgage-backed and asset-backed securities reached USD1,542 billion in the first half of 2007, accounting for 37.5% of the newly issued debts in the global debt capital markets. Table 6A.2 Institutions with losses in sub prime business(by date) [pic] Sources: Bloomberg, bank of communication Some banks sponsor off-balance-sheet vehicles which are leveraged and use loans to invest in the sub-prime related credit...
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...the impact of the fixed and floating rates. Introduction Prior to 1970, fixed, or say pegged exchange rate regime was adopted by almost all countries worldwide. Afterwards, some countries have gradually made the transition from fixed to flexible exchange rates, which allow currency to float freely. In the following section, the definition of both fixed and flexible exchange rates will be introduced. Thereafter, the situation in Australia, which floating exchange rate regime will be compared with that of in Hong Kong, which uses fixed exchange rate regime. Moreover, the impact of different exchange rate regimes on economic entities will be discussed. Types of exchange rate Fixed/Pegged exchange rate A fixed exchange rate is usually pegged the value of a currency to a strong foreign currency such as US dollar or Euro (Hunt and Terry, 2011). This kind of rates is sets and maintained by the local government (e.g. central bank). In order to maintain a stable rate, the government trades its own currency on the foreign exchange market in return for the currency to which it is pegged. This kind of regime requires the local government holds a high level of foreign reserves in terms of the pegged currency. Flexible/Floating exchange rate Differently, flexible exchange rate is determined by supply and demand in private market. By applying a floating exchange rate regime, any difference in supply and demand within the foreign...
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...TABLE OF CONTENTS 1. INTRODUCTION ……………………………………………………………………………. 4 2. PROPERTY BUBBLES IN HONG KONG ………………………………….…………….. 5 INFLATION AND INFLATION RATE IN HONG KONG ……………………………….. 10 3. CONCLUSION…………………………………………………………………………18 4. REFERENCES ……………………………………………………………………………..19 5. APPENDICIES …………………………………………………………………………..... 20 Appendix 1 ………………………………………………………………………………… 20 Appendix 2 ………………………………………………………………………………… 21 Appendix 3 ………………………………………………………………………………… 22 Appendix 4 …………………………………………………………………………………23 Appendix 5 ………………………………………………………………………………… 24 Appendix 6 ………………………………………………………………………………… 25 INTRODUCTION Resources and scarcity are the basic elements and tenet of economics, so resources and scarcity are related to human wants and desires. Money and time are the most constantly for the resources and scarcity which are the allocation from the resources and impacting the economically efficiency. Hong Kong has been enjoyed as one of the four dragons in Asia for 30 years with the rapid growth of economy worldwide and globalization, but she also suffers from the worldwide downside of economy due to the poor fundamental and lack of long–run strategies that trigger the existing difficult situation. There have many issues and challenges threatening Hong Kong economy recently, we analysis and evaluate two important problems, (1) Property bubbles in Hong Kong...
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...whole control structure of the corporation. 2.Which are the top 3 most important institutions for the Capital Markets in HK, and why? Securities & Futures Commission (SFC), Office of the Commissioner of Insurance (OCI) and Hong Kong Monetary Authority (HKMA) The Securities and Futures Commission (SFC) of Hong Kong regulates the securities and futures markets in Hong Kong. Its responsibility is to ensure the order of security and future markets in Hong Kong, to protect the rights of investors and to promote Hong Kong as a key financial center both in China and all over the world. Office of the Commissioner of Insurance (OCI) regulates the insurance in Hong Kong. According to the Insurance Companies Ordinance, the primary objective of OCI is to supervise the financial conditions and operations of authorized insurers, and to facilitate the development of the insurance industry. The Hong Kong Monetary Authority (HKMA) is the currency board of Hong Kong. According to the Exchange Fund Ordinance, the primary objective of HKMA to stabilize Hong Kong’s banking system and currency, and to promote the development of the financial system in Hong Kong. Therefore, Securities & Futures Commission (SFC), Office of the Commissioner of Insurance (OCI) and Hong Kong Monetary Authority (HKMA) are the most important institutions for the Capital Markets in HK. 3.Which are the top 3 most important...
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...global economy (in PPP terms that suggest that their currencies are undervalued), is the fastest growing region, and makes significant contribution to global GDP growth => Once a key contributor to GDP, China lost footing to the west due to technological efficiency in the US, UK, and Europe => The four tigers (HK, SG, KR, TW) had 8% growth rates from 1970-1997 due to high saving/investment rates, strong education, stable macro environment, and few downturns => Success of East Asia as a whole due to the aforementioned factors as well as limited price distortions, agricultural development, foreign tech, directed credit, selective industrial promotion, and export push policies => Key weaknesses prior to the 1997 crisis were a lack of increase in output efficiency, poor banking regulations and poor legal frameworks Asian Crisis of 1997 => 1) western investors loaned money to east Asian banks (believing growth would continue and that the IMF would bailout if needed) 2) money was funneled into projects with cheap credit and no collateral 3) projects didn’t have good returns and currency speculators started to sell east Asian currencies 4) triggered drop in baht value leading to overall concern => TH, ID, KR, MY, and lesser extent PH were hammered by the crisis => SG and HK survived due to high reserves and strong economic fundamentals => other countries escaped either because their currencies were not convertible or because they weren’t exposes...
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...Ravenhill, eds., The Asian Financial Crisis and the Architecture of Global Finance, ed., Cambridge, 2000, pp. 1-35 [pic] Summary: The Asian financial crisis resulted from the sudden flight of large amounts of capital from Asian countries that lacked adequate systems of prudential regulation, and whose foreign exchange rate proved disastrously brittle. The crisis was unique in its unprecedented severity of corporate distress and banking sector problems, and its quickness in recovery from the crisis. While technical improvements in the financial system were institutionalized, the crisis did not bring fundamental structural revisions, in both political and economic arena. Doughty resistance from entrenched ideologies and interests in the U.S, the U.K, and the IMF prevented the reforms and rearrangements in the international financial system from happening. ➢ The East Asian crisis---the severest jolt to the world economy since the Oil Shock in early 1980s. ➢ Asian Crisis ---spread from Thailand to Indonesia, the Philippines, Malaysia and Korea. Sequences---Export decline ( loss of investors’ confidence( Currency devaluation due to lack of foreign reserve( IMF emergency fund requiring tight budget and monetary policy( increase in non-performing loans and damage in domestic industries ➢ Drastic increase in international private capital inflow in the ‘90s was key to understand this crisis. Liberalization within a flawed policy framework ➢ Inadequate regulation...
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...consideration on November 30, 2015. Two Staff Supplements titled Review of the Method of Valuation of the SDR— Weighting Formula and SDR Interest Rate and Review of the Method of Valuation of the SDR—Revised Proposed Decision and Illustrative Currency Amounts. The following documents have been or will be separately released: A Press Release summarizing the views of the Executive Board as expressed during its November 30, 2015 consideration of the staff report. The Executive Board, in its formal meeting on the review on November 30, 2015, adopted the revised proposed decisions contained in the supplement Review of the Method of Valuation of the SDR—Revised Proposed Decision and Illustrative Currency Amounts. These decisions will govern the weights of currencies in the SDR currency basket effective October 1, 2016. The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents. Electronic copies of IMF Policy Papers are available to the public from http://www.imf.org/external/pp/ppindex.aspx International Monetary Fund Washington, D.C. © 20[xx] International Monetary Fund November 13, 2015 REVIEW OF THE METHOD OF VALUATION OF THE SDR EXECUTIVE SUMMARY This paper provides the basis for the quinquennial review of the method of valuation of the Special Drawing Right (SDR). The review...
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...I. Overview of the Hong Kong Capital Market Located in the heart of Asia, Hong Kong positioned itself to be a major international financial center of the continent. Its capital market is comprised of integrated network of institutions and markets which provide a wide range of products and services to local and international customers and investors. Hong Kong’s financial markets are characterized by a high degree of liquidity and operate under effective and transparent regulations, which meet international standards. The Government of the Hong Kong Special Administrative Region (HKSAR) abides by the principle of keeping intervention into the way in which the market operates to a minimum and has endeavoured to provide a favorable environment in which business operates. Its policy of low and simple taxation allows maximum room for business initiatives and innovation. There is a strong emphasis on the rule of law and fair market. There are no barriers of access to the market by foreign businesses and no restrictions on capital flows into and out of Hong Kong. Hong Kong’s privileged location in the Northeast Asia, on the other hand, makes it a gateway to China. Moreover, Hong Kong is situated at appropriate time zones that allow 24-hour continuous trading of foreign exchange and gold when the two markets in New York and London are closed. II. Financial Players and Intermediaries in Hong Kong Preview:A closer look at the financial markets As of July 2010, there were...
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...Minimum wage in Hong Kong Table of Contents 1. Part 1: Minimum Wage law in Hong Kong 2 2. Introduction 2 3. Minimum Wage – Economic Theory 2 4. Introduction in Hong Kong – May 2010 3 5. Impacts – 15 months later 5 5.1. Employment 5 5.2. Firms profitability 6 5.3. Inflation 7 6. Economic cycle considerations 9 7. Part 2: Housing issues in Hong Kong 9 8. Introduction 9 9. Housing situation in Hong Kong 9 10. Housing Demand in Hong Kong 11 11. Housing supply in Hong Kong 14 12. The Current Government Policies 15 12.1. Policy 1: 15 12.2. Policy 2 16 12.3. Policy 3 16 13. Conclusion 17 14. Bibliography 18 Part 1: Minimum Wage law in Hong Kong Introduction The Hong Kong Government introduced of a Minimum Wage in Hong Kong in May 2011, in response to increased incomes disparity in the territory. It uses economic theory to predict certain impacts such as level of employment, profits of firms, inflation effect and potential positive effects on the economy in general. Minimum Wage – Economic Theory Economic theory tells us that when artificial price floors are introduced in the market, they force prices to remain above the level that balances supply and demand. The same is true with minimum wage; it raises the quantity of labor supplied and reduces the quantity of labor...
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...Chapter 3 1. | Accountants divide the economic life of a business into artificial time periods because of the time period assumption. A. | True | B. | False | | 2. | Which of the following time periods would not be referred to as an interim period? A. | Monthly | B. | Annually | C. | Semi-annually | D. | Quarterly | | 3. | An accounting time period that is one year in length is referred to as A. | a reporting period. | B. | a fiscal year. | C. | an interim period. | D. | a distressed year. | | | | 4. | The time period assumption states that A. | companies must wait until the calendar year is completed to prepare financial statements. | B. | companies use the fiscal year to report financial information. | C. | the economic life of a business can be divided into artificial time periods. | D. | companies record information in the time period in which the events occur. | | 5. | An accounting time period that is one year in length is A. | a calendar year. | B. | a fiscal year. | C. | an interim period. | D. | a quarterly period. | | 6. | The revenue recognition principle dictates that companies recognize revenue in the accounting period in which payment is received. A. | True | B. | False | | 7. | The revenue recognition principle dictates that revenue should be recognized in the accounting records A. | when cash is received. | B. | when performance obligation is satisfied. | C. | at the end of the month. | ...
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...Running head: International Financial Markets International Financial Markets Unit 1 Individual Project Michelle McCollough June 8, 2007 American InterContinental University Abstract The below paper will discuss starting an operation in a foreign country. I will compare and contrast the United Kingdom and Hong Kong. I will also explain which country would be best to begin a business in. International Financial Markets Introduction Acme is planning on having a greenfield production facility overseas. The two foreign countries that I have decided to compare for starting business in is the United Kingdom, which is part of the European Union and Hong Kong. Hong Kong is not part of the European Union. I will first analyze the UK and then Hong Kong. Analysis of the United Kingdom (UK): The United Kingdom of Great Britain and Northern Irelane is a state that consists of the nations of England, Scotland, Wales, and Northern Ireland. This is also under the UK sovereignty and is not apart of the UK itself, however are the “Crown dependencies of the Channel Island and the Isle of Man.” The said dependencies seek their own policies over taxes, employment, education, and health. They are subjected to UK control on matters such as defense (Doing Business in the UK, 2005). The UK has an island of 242,500km2. The UK’s population in 2002 was 59.2 million and in 2006 the population was 60.6 million. The languages...
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...RMB Business in Hong Kong Financial Services and the Treasury Bureau 22 November 2010 1 RMB business in Hong Kong • 2004: Banks offer renminbi services including deposit taking, currency exchange, remittance, debit and credit cards, personal cheques • 2007: Mainland financial institutions may issue RMB bonds in Hong Kong • 2009: Trade settlement and finance 2 Latest developments • 11 Feb: Elucidation of supervisory principles by HKMA • 22 Jun: Expansion of the RMB trade settlement scheme • 19 Jul: Revised Clearing Agreement on RMB business • 17 Aug: Pilot scheme for eligible institutions outside the Mainland to invest in the Mainland’s interbank bond market 3 Expand RMB trade settlement scheme • Expanded RMB trade settlement scheme to cover 20 provinces and cities • Their trade transactions with any part of the world can be settled in RMB • Enterprises in the relevant Mainland provinces and cities can settle merchandise imports, service trades and other current account transactions in RMB • List of eligible enterprises on the Mainland that can settle merchandise exports in RMB expanded 4 Revised Clearing Agreement • Banks can open RMB accounts for companies and organisations, including financial institutions • Removed restrictions on RMB interbank transfers between personal accounts and corporate accounts • Banks can convert RMB for corporate customers for purposes other than for trade settlement, given that they do not square the corresponding...
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...The Hongkong and Shanghai Banking Corporation Limited Annual Report and Accounts 2012 THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED Annual Report and Accounts 2012 Contents Financial Highlights ........................................................................................................................................... Report of the Directors ...................................................................................................................................... Financial Review ............................................................................................................................................... Statement of Directors’ Responsibilities ............................................................................................................ Auditor’s Report ................................................................................................................................................ Financial Statements .......................................................................................................................................... Consolidated income statement ......................................................................................................................... Consolidated statement of comprehensive income ............................................................................................ Consolidated balance sheet .......................................
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