Hong Kong Unaffected By US Sub-Prime Crisis
Information submitted by locally incorporated banks to the Hong Kong Monetary Authority
indicates that their aggregate exposure to the US sub-prime mortgage market will not
have systemic implications for Hong Kong's banking sector, HKMA Chief Executive
Joseph Yam says.
In his weekly Viewpoint column, published Thursday, Mr Yam explained, however, that although the US
sub-prime mortgage problem may not have systemic implications for Hong Kong's
banking sector, 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 stated. "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." .
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