(March 17): Hong Kong leader John Lee said conflict in the Middle East could fuel capital flows to the Asian financial hub, as investors put their focus on diversification and security.
The Iran war has rattled markets worldwide, sending oil above US$100 ($127.93) per barrel, spurring a rush to the dollar and fueling worries about stagflation. Although he acknowledged the short-term shocks, Lee said that a longer-run impact would be to highlight the stability of Hong Kong, one of the world’s major financial centres.
“The conflict in the Middle East actually highlights the strengths of Hong Kong,” he told reporters in a briefing on Tuesday, predicting sustained capital flows over the medium- to long-term. “Investors and businesses looking for diversification at the same time as looking for security of their investment will definitely look to Hong Kong.”
He pointed in particular to opportunities for family offices, risk management and asset management. The capital flows may also provide a boost to the offshore renminbi market, he added.
Lee said the government is concerned about surging oil prices and the disruption of supply. The Strait of Hormuz, the conduit of one fifth of global oil trade, has largely come to a standstill since the conflict.
Hong Kong will closely monitor oil price fluctuations and require suppliers to provide more timely data for market transparency, Lee said, adding that authorities are already in touch with companies to ensure adequate inventories and stable energy supplies.
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The government has also been in touch with local airlines to stress that any adjustment in airfares must be “reasonable and transparent,” he said.
Hong Kong’s de facto flag carrier, Cathay Pacific Airways Ltd, is set to double its passenger fuel surcharge from March 18, passing on a surge in kerosene costs to customers. It joins other airlines in raising the levy as the war in Iran drives up oil prices.
Uploaded by Tham Yek Lee
