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The Census and Statistics Department (C&SD) today (April 29) released the international investment position (IIP) statistics for Hong Kong for the reference year of 2009.
IIP is a balance sheet showing the stock of external financial assets and liabilities of an economy at a particular time point. External financial assets consist of financial claims on non-residents and other financial assets where no debtor is involved (e.g. monetary gold). External financial liabilities refer to financial claims of non-residents on residents of the economy.
In compiling and presenting the IIP statistics, the standards prescribed in the Fifth Edition of the Balance of Payments Manual of the International Monetary Fund are adopted.
IIP Statistics for 2009
Summary
At the end of 2009, Hong Kong's external financial assets and liabilities amounted to $19,812.5 billion and $14,044.3 billion respectively. After netting out the external financial liabilities from the external financial assets, Hong Kong was a net creditor. Hong Kong's net external financial assets amounted to $5,768.2 billion at the end of 2009, corresponding to 353% of GDP in that year.
The ratios of both Hong Kong's external financial assets and liabilities at the end of 2009 to GDP in that year remained substantial, at 1 213% and 860% respectively, reflecting that Hong Kong is a highly externally oriented economy and also a major financial centre in the region with considerable cross-territory investment.
Most of the broad IIP components were in net asset positions at the end of 2009, except direct investment (DI). DI was in a net liability position as the amount of DI made by non-residents in Hong Kong was greater than that made by Hong Kong residents abroad.
Compared with the end of 2008, the net IIP at the end of 2009 increased by $941.5 billion. This was mainly attributable to the increases in the net asset position of portfolio investment (PI) and in reserve assets (RA), which exceeded the increase in the net liability position of DI and decreases in net asset positions of financial derivatives (FD) and other investment (OI).
External Financial Assets
Hong Kong's external financial assets amounted to $19,812.5 billion at the end of 2009. DI was the largest component, accounting for 32.6% ($6,468.8 billion) of the total value. This reflected the position of Hong Kong as a major external direct investor in the rest of the world, notably in the mainland of China. It also reflected the common practice of setting up non-operating companies in offshore centres such as British Virgin Islands and Bermuda by Hong Kong enterprises for channelling DI funds back to Hong Kong or to other places.
PI was the second largest component of Hong Kong's external financial assets, accounting for 31.7% ($6,288.4 billion) of the total value at the end of 2009. Within this, 61.5% was equity securities while the other 38.5% was debt securities.
At the end of 2009, 23.7% ($4,694.8 billion) of Hong Kong's external financial assets were in the form of OI. Most of the OI assets were held by banks in the form of inter-bank deposits, reflecting the role of Hong Kong as an international banking centre in channelling funds to the rest of the world.
RA amounted to $1,983.6 billion or 10.0% of Hong Kong's total external financial assets at the end of 2009.
FD assets held by residents were relatively insignificant, accounting for only 1.9% ($377.0 billion) of the total external financial assets at the end of 2009.
Comparing the end of 2009 with the end of 2008, total external financial assets increased by $2,291.3 billion or 13.1%. Within this total, DI, PI and RA increased by $562.6 billion (9.5%), $1,970.2 billion (45.6%) and $568.9 billion (40.2%) respectively, more than offsetting the decreases of $298.3 billion (44.2%) and $512.1 billion (9.8%) in FD and OI respectively.
External Financial Liabilities
Hong Kong's external financial liabilities amounted to $14,044.3 billion at the end of 2009, in which 50.4% ($7,074.3 billion) were in the form of DI. Such a high proportion of DI liabilities reflected that Hong Kong had attracted many non-resident enterprises to set up direct investment companies here. It was also attributable to round-tripping of investment whereby the investment funds originated from Hong Kong were channelled through offshore centres back to Hong Kong.
OI liabilities also constituted a significant part of Hong Kong's external financial liabilities, accounting for 28.9% ($4,059.1 billion) of the total at the end of 2009. Similar to OI assets, most of the OI liabilities were related to deposits of the banking sector.
At the end of 2009, PI liabilities accounted for 18.6% ($2,611.0 billion) of Hong Kong's total external financial liabilities. These PI liabilities were concentrated in equity securities, which took up a share of 95.6%.
FD liabilities owed by residents were also relatively insignificant, accounting for only 2.1% ($300.0 billion) of the total external financial liabilities at the end of 2009.
Comparing the end of 2009 with the end of 2008, total external financial liabilities increased by $1,349.7 billion or 10.6%. Within this total, DI, PI and OI increased by $748.5 billion (11.8%), $829.1 billion (46.5%) and $44.9 billion (1.1%) respectively, more than offsetting the decrease of $272.7 billion (47.6%) in FD.
Relationship between BoP and IIP
While IIP measures the stock of external financial assets and liabilities of an economy at the end of a reference period, the BoP financial account measures transactions in these assets and liabilities which have taken place during the period.
Transactions in assets and liabilities will affect the stock of the respective assets and liabilities. In addition, price changes and exchange rate variations as well as other adjustments will also affect the value of the stock, when expressed in the local currency of the economy.
Commentary
A Government spokesman says that Hong Kong's international investment position is sound and strong, and indeed strengthened further over the past year, with the ratio of the net external financial assets to GDP rising markedly to 353% in 2009 from 288% in 2008.
The spokesman states further that both Hong Kong's external financial assets and liabilities were enormous, particularly so when expressed as ratios to GDP. This signified the diverse roles of Hong Kong as an international financial centre, and a conduit for channelling investment funds to the Mainland and other parts of the world.
Further information
Table 1 gives the IIP by broad component. Table 2 gives the IIP by standard component. For enquiries about IIP statistics, please contact the Balance of Payments Section of the C&SD (Tel.: 2116 8660; Fax: 2116 0278; Email: bop@censtatd.gov.hk).
The present IIP statistics for the reference year of 2009 are only preliminary, and are subject to revision upon the availability of more data.
More details of the estimates of IIP will be published in the publication Balance of Payments Statistics of Hong Kong, First Quarter 2010. The publication will be available on 22 June, 2010. Users can download the publication free of charge on the website of C&SD (www.censtatd.gov.hk/products_and_services/products/publications/statistical_report/national_income_and_bop/index.jsp).
Ends/Thursday, April 29, 2010
Issued at HKT 16:30
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