Dubai: Hong Kong which has been facing political demonstration for more than two months is fully prepared to deal with people’s aspirations in civil manner and the impact of protest have been minimal on the economy, said John C Tsang, Financial Secretary of Hong Kong.
”What these protests reflect is the civility of the people of Hong Kong. In the past two months these protests have been conducted very peacefully and the authorities including the police in Hong Kong have been very patient. In general, its impact on business as whole was marginal,” said Tsang.
While admitting that business in localities where protests were concentrated were impacted, Tsang said contrary to the poplar expectations, despites the protests tourist arrivals increased by 15 per cent during the last two months.
While these internal challenges will be dealt with maximum civility and patience, he said, by being an open economy Hong Kong is susceptible to external shocks. “We are always conscious of the sudden shocks that may come. So we prepare ourselves to maintain the integrity of our financial system, particularly our banking system which is the most important part of our financial services industry. We know that interest rates may go up before the middle of next year. So in the past couple of years we have been preparing ourselves,” he said
Hong Kong has been increasing the capital adequacy ratio of banks. Now it is almost 16 per cent. In addition, banks have been improving on the loans to deposit ratio with higher down payments for mortgages to keep loans to value ratio at acceptable levels.
“A strong set of macro-prudential measures are in place. We have stress tested our banks using the scenario where interest rates will go up by 3 per cent and how would that impact the banks. We are sure that the banks will remain healthy even if the rates were to go up,” he said.
