Hi Merry, Don't do it. Don't think it. I read that in Money Rock HK and Freedom Mountain Kowloon, and was amused.
Most folks I know in HK keep their savings in USD or currency deposits other than HKD. Checking account is mostly in USD, though USD checking is also available. Companies accept payment in either currency, though prefer HKD if the money is meant for working capital. So, effectively, all the bets against the HKD has been placed and is in fact always in place. Should the HKD collapse 20% tomorrow, I do not know of many folks who care, except that their incomes go up, and their employees get paid less. Real estate assets, at least the luxury end, will adjust upward to reflect new growth opportunities for rent, and mortgage values drop in relation to cash on deposit in the bank.
High savings rate is magical in ability to weather storm.
What the article does tell me is that the speculators still got HK in their gun sight, and that I am doing the cautious thing when keeping most of my liquid cash in USD denominated deposits. I am, however, moving money very gradually to Euro, maybe eventually to as high as 25-30% of cash. My income is mostly in USD and my base currency is USD (because most of my share purchases occur in USD).
On the HKD devaluation, I do not see any need as the economy is doing better than most if not all in Asia (incl. Japan). Yes, the cost in HK is high (amongst the highest in the world), China would probably devalue before joining WTO (I do not believe China will join soon, as they have lost their enthusiasm in view of what they and I see as impending storm), and Japan Yen is devaluing.
We have no factories in HK. If China devalues, we will do better as we source from China. We trade equally with Eurozone and USzone, and our reserve is balanced between the two currencies. HK has done well not because of our cost vs Singapore, Manila, Taipei, Tokyo or Bangkok. HK has done well because we are free, with small government, low tax, and we are able to be quick. HK's high cost is a function of our desireability as a business center.
I am actually hoping that Bridgewater is right about the potential instability of the HKD and that speculators think they can profit from mounting an attack. We locals made out like bandits the last time people tried. The taking was delicious, and driving Soros' lieutenant to psychological breakdown was satisfying.
I have shown the article to my HKMA (HK central bank) buddy, and he laughed. I do not laugh. I want the speculators to try, and try hard. BBQ fire is ready, and sauce is being mixed.
We have few loyalties in HK, other than family and friends, and we will play with just about any fire, as long as the upside is more than the downside. Upside in betting against the HKD, on unleveraged basis, is low, and on leveraged basis, can mean death at the speed of intervention, out of one of the largest reserves in the world, backed by another one of the largest reserves in the world.
Oh, message to Soros, please, make another try. It will be fun, exciting, and profitable for some.
Chugs, Jay |
