Save HK Total Foreign Currency Reserve Assets

Before Linked Exchange Rate System (LERS) came into its official existence in 1983, the government of Hong Kong has transferred its accumulated government surplus, currency-issuing funds, and land funds to foreign currency reserve in 1976 in order to provide full monetary support to its monetary base. According to Hong Kong Monetary Authority (HKMA), all foreign reserve can be used to support LERS.

Hong Kong's monetary base includes:
- Certificates of Indebtedness, which provide full backing to the banknotes issued by note-issuing banks
- Government-issued Notes and Coins in circulation
- Aggregate Balance that is the sum of banks’ clearing account balances kept with the HKMA
- Exchange Fund Bills and Notes issued by the HKMA on behalf of the government for the account of the exchange fund.

Save Monetary Base

Under LERS, Hong Kong's Monetary Base is backed by the foreign reserves. They increase/decrease with consistency. Monetary Base in Hong Kong has four compositions:
1. Certificates of indebtedness
"CIs are held by note-issuing banks as cover for the banknotes they issue." -HKMA
The note-issuing bank needs to provide US dollars at the rate of 7.8 HKD/USD to back up the notes they issue.
2. Government-issued currency in circulation
3. Aggregate balance
Aggregate balance is "the sum of the balances in the clearing accounts maintained by the banks with the HKMA for settling interbank payments and payments between banks and the HKMA. It represents the level of interbank liquidity, and is a part of the Monetary Base." -HKMA
4.Outstanding exchange funds bills and notes (EFBNs)
"EFBNs are debt instruments issued by the HKMA for the account of the Exchange Fund. These instruments are fully backed by the foreign reserves." -HKMA
HKMA offers the banks Convertibility Zone to convert at a rate between the weak- and strong-side convertibility (or between 7.85 and 7.75 USD/HKD). Banks' outstanding exchange funds bills and notes are up for OMO.

Save Monetary Base (Monthly Changes)

Under LERS, Hong Kong's Monetary Base is backed by the foreign reserves. They increase/decrease with consistency. Monetary Base in Hong Kong has four compositions:
1. Certificates of indebtedness
"CIs are held by note-issuing banks as cover for the banknotes they issue." -HKMA
The note-issuing bank needs to provide US dollars at the rate of 7.8 HKD/USD to back up the notes they issue.
2. Government-issued currency in circulation
3. Aggregate balance
Aggregate balance is "the sum of the balances in the clearing accounts maintained by the banks with the HKMA for settling interbank payments and payments between banks and the HKMA. It represents the level of interbank liquidity, and is a part of the Monetary Base." -HKMA
4.Outstanding exchange funds bills and notes (EFBNs)
"EFBNs are debt instruments issued by the HKMA for the account of the Exchange Fund. These instruments are fully backed by the foreign reserves." -HKMA
HKMA offers the banks Convertibility Zone to convert at a rate between the weak- and strong-side convertibility (or between 7.85 and 7.75 USD/HKD). Banks' outstanding exchange funds bills and notes are up for OMO.

Save US LIBOR minus HK HIBOR

The gap between LIBOR and HIBOR creates opportunities for arbitrage trading.

Save HKD Interest Settlement Rates (HIBOR)

HKD Interest Settlement Rates, commonly known as Hong Kong Interbank Offered Rates or HIBOR, is the rate where banks and financial institutions exercise lending and borrowing between one another within Hong Kong market.

HIBOR reflects the amount of liquidity in the market. Rising HIBOR suggests a decrease in market liquidity.

Save Hong Kong Interbank Offered Rate in RMB

When HIBOR rises, liquidity tightens. When HIBOR lowers, liquidity improves.

Save HK Prime Rate

Save Hong Kong M1 & M2

Money supply is an indicator for the level of liquidity in the market. But money supply in Hong Kong is vulnerable to the global environment of loans.

"M1= The sum of legal tender notes and coins held by the public plus customers' demand deposits placed with banks.
M2= M1+ customers' savings and time deposits with banks plus negotiable certificates of deposit (NCDs) issued by banks held outside the banking sector.
M3= M2+ customers' deposits with restricted licence banks and deposit-taking companies plus NCDs issued by these institutions held outside the banking sector." -HKMA

When M1 YoY outgrows M2 YoY, the private sector is optimistic about investing, and demand deposits might grow.

Save Total Loans and Advances

This chart shows the totals loans and advances issued by licensed banks in Hong Kong. When the economy expands, demand for loans increases and financial services thrive.

Save Customers' Demand Deposits in Licensed Banks

Customers' demand deposits reflect their sentiment towards future economic conditions and increase when they're optimistic, bringing both investment and consumption up.

Save Customers' Time Deposits in Licensed Banks

Customers' time deposits reflect their sentiment towards future economic conditions and decrease when they're optimistic, bringing both investment and consumption up.

Save HK Put/Call Ratio

Put/Call Ratio = (Put Volume / Call Volume - 1) *100%
Benchmark is 0. When the ratio rises over benchmark, the market is bearish. When the ratio is below benchmark, the market is bullish.