Hong Kong Banks Borrow Record Short-Term Liquidity Amid Booming Equities Demand
Hong Kong banks tapped the largest amount of short-term cash in over five years on Tuesday to meet the surge in demand for local equities.
The Hong Kong Monetary Authority (HKMA), the city's de facto central bank, provided HK$5.5 billion ($707 million) through its discount window, the highest since December 2019, according to Bloomberg data.
"The liquidity tightening in Hong Kong is, in our view, driven by demand for HK equities," said Wee Khoon Chong, strategist at BNY. "Liquidity probably will stay tight in the near term as HK equities' momentum continues."
The lending coincides with outperforming Chinese A-shares and Hong Kong stocks against global peers in the past month, fueled by optimism over DeepSeek's AI capabilities and expectations of a more business-friendly stance from China.
Chinese mainland investors purchased a record HK$22.4 billion worth of Hong Kong stocks on Tuesday, the highest daily net buy since early 2021.