Richard Yu stated that the external environment remains uncertain, but Hong Kong's economy is steadily improving and continues to align with the national development strategy

The President of the Hong Kong Monetary Authority, Richard Yu, stated at the Financial Affairs Committee meeting that the local economic development is steadily progressing, but the external environment remains uncertain. He anticipates that the Federal Reserve may further cut interest rates this year, but the trend of interest rates still needs further observation. He mentioned that Hong Kong will further align with the national development strategy, and the Monetary Authority will closely monitor the market to ensure the maintenance of monetary and financial stability in Hong Kong. The allocation of the Exchange Fund will be decided by the Financial Secretary Regarding the property market, Richard Yu said that last year's decline in interest rates led to better performance in the local economy and stock market, with property prices rebounding since the second quarter of last year, rising 3.3% for the year, thus ending a three-year decline. He also pointed out that transaction volumes have similarly warmed up, increasing by over 18% year-on-year, with primary market transactions surpassing secondary market ones. Developers' inventory reduction strategies have been effective, and in the first few weeks of this year, the leading index from real estate agents indicated a 1.6% increase in property prices. During the meeting, some members mentioned whether the Exchange Fund would allocate more funds to the government. Richard Yu stated that such allocations are decided by the Financial Secretary. The Exchange Fund Ordinance empowers the Financial Secretary, and he emphasized that the separation of accounts between the Exchange Fund and the government is performing well, and this arrangement may not need to be changed. He also indicated that the Hong Kong financial system is adequately prepared to handle significant capital inflows and outflows. Yuen Kwok-hang: Bank loans are recovering an upward trend Yuen Kwok-hang, Vice President of the Monetary Authority, stated that as loan costs decrease, the total loan volume in Hong Kong's banking sector is expected to recover an upward trend by 2025, with local loans, overseas loans, and trade financing all showing moderate growth. He noted that the ratio of specific category loans is slowly rising to nearly the long-term average level of 2%, with the end of last year's third quarter at 1.98%, basically flat with the second quarter's 1.96%, and the year-end data not differing much from that level. Yuen Kwok-hang pointed out that although commercial real estate-related loans face certain repayment pressures, he believes that the overall risk in the banking sector is controllable. He cited data indicating that as of the end of last year's third quarter, the provisioning coverage ratio for banks, excluding collateral, reached 65%. When including the market value and liquidity of collateral, the coverage ratio is even higher at 150%, far exceeding international safety levels, and the capital adequacy ratio and liquidity of the banking sector are also performing robustly. Still closely monitoring the operational pressures of SMEs In light of the economic recovery, the Monetary Authority is still closely monitoring the operational pressures faced by small and medium-sized enterprises (SMEs). Yuen Kwok-hang stated that the dedicated working group for SME financing has recently met to discuss this year's work, primarily to assist banks in providing substantial financial support and various upgrading and transformation support for SMEs. He mentioned that the Monetary Authority will also promote intellectual property financing in the banking sector. Although the current business volume is not large, through collaboration with the Commerce and Economic Development Bureau, the Intellectual Property Department, and the banking industry to launch a sandbox, it is hoped to accumulate experience and establish a financing ecosystem for intellectual property in Hong Kong. Li Da-zhi: Precious metals have certain investment value The Hong Kong Financial Services and the Treasury Bureau recently signed a cooperation agreement with the Shanghai Gold Exchange, but gold prices have recently experienced sharp fluctuations. Li Da-zhi, Vice President of the Monetary Authority, stated that the Exchange Fund holds a small amount of physical gold, and some of the commodity investment portfolio is related to gold, but the quantity is not large. He mentioned that precious metals have certain investment value, but price changes differ from those of bonds and are also different from investing in a company. The Exchange Fund prioritizes "capital preservation first, long-term appreciation," and will continue to monitor market trends but will not increase the allocation ratio for now He also pointed out that there are many market variables, especially geopolitical factors, and the direction of U.S. interest rates is also unclear. The scale of the foreign exchange fund needs to diversify risks and make defensive moves, without favoring any particular asset. "100% Guaranteed Loans" Bad Debt Rises to 18.67% Li Dazhi mentioned that in the fourth quarter, the bad debt ratio of "100% Guaranteed Special Loans" rose to 18.67%, an increase of 0.5 to 0.6 percentage points compared to the third quarter. This is a slowdown from an earlier increase of over 3 percentage points in one month, and he hopes this trend will continue. In terms of fraud prevention, Ruan Guoheng stated that since the "Banking Industry Amendment Ordinance" took effect last November, allowing for information exchange between banks, the effectiveness of fraud prevention has been very good. The Hong Kong Monetary Authority also plans to increase the number of participating banks from the current 10 to all 28 retail banks in the first half of this year. Regarding the development of green finance, Chen Weimin pointed out that secondary trading of green bonds may not be very active due to limited supply, and investors tend to prefer to buy and hold. He stated that the Hong Kong Monetary Authority and the Securities and Futures Commission will promote the secondary market according to the roadmap, noting that mainland institutions can currently invest in Hong Kong green bonds through the Bond Connect, and there have already been investments from mainland investors in government-issued green bonds