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The following is issued on behalf of the Hong Kong Monetary Authority:
 
(Approved for Issue by the Exchange Fund Advisory Committee by Circulation)

Report on Currency Board Operations (December 25, 2021 – April 12, 2022)
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     The Sub-Committee noted that the Hong Kong dollar (HKD) traded within a range of 7.7832 – 7.8378 against the US dollar (USD) during the review period. The HKD had softened since February amid market concerns over the US Federal Reserve (Fed)’s policy normalisation and the risk-off sentiment triggered by the Ukraine situation. Amid expectation of further US rate hikes, HKD interbank interest rates (i.e. HIBORs) increased slightly during the review period but remained at low levels by historical standards. While the Fed’s policy normalisation process was expected to proceed at a faster pace than the previous rate hike cycle in 2015-2018, the ample HKD liquidity suggested that increases in HKD interbank rates might lag those of the USD interest rates. The extent of lagging would depend on the supply and demand situation of HKD in the local market. Overall, the HKD exchange and interbank markets continued to trade in a smooth and orderly manner.
      
     The Sub-Committee noted that the Monetary Base increased to HK$2,147.48 billion at the end of the review period. In accordance with the Currency Board principles, all changes in the Monetary Base had been fully matched by changes in foreign reserves.
      
     The Report on Currency Board Operations for the review period is at Annex.
 
Monitoring of Risks and Vulnerabilities
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     â€‹The Sub-Committee noted that the global economic outlook worsened as a result of the Ukraine situation, which had driven up global commodity prices and triggered bouts of financial market volatility. Faced with sharp inflationary pressures, the Fed had telegraphed its intentions to deliver successive rate hikes and shrink its balance sheet. In turn, global financial conditions might tighten, especially if the pace of US monetary normalisation were to pick up. 

     The Sub-Committee noted that in Mainland China, economic growth could face potential headwinds arising from the Ukraine situation and new COVID-19 outbreaks. 
      
     The Sub-Committee noted that in Hong Kong, the fifth wave of local infections had brought significant pressures on the economy in early 2022. The challenging global environment had also posed downside risks to growth. The labour market weakened with the unemployment rate rising, while underlying inflation remained largely in check despite elevated external prices. Meanwhile, the housing market showed signs of stabilisation more recently amid easing local infections.

Hong Kong’s Residential Mortgage Loans Offered by Non-bank institutions
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     The Sub-Committee noted a paper that examined the role of non-bank institutions in the residential mortgage market through the use of transactional big data.  read more

     Following is a question by the Hon Leung Man-kwong and a reply by the Secretary for Transport and Housing, Mr Frank Chan Fan, in the Legislative Council today (June 8):

Question:

     Currently, under the White Form Secondary Market Scheme (WSM) implemented by the Hong Kong Housing Authority (HA), persons eligible for White Form status and allocated with quotas may buy flats with premium unpaid in the secondary market of subsidised sale housing flats (collectively referred to as “Home Ownership Scheme (HOS) flats”). In this connection, will the Government inform this Council:

(1) given that the maximum mortgage guarantee period (guarantee period) for HOS flats currently provided by the HA is 30 years counting from the date of the first assignment, of a breakdown of the current number of HOS flats in the territory by the remaining guarantee period;

(2) as it is learnt that the remaining guarantee period of an HOS flat will affect the mortgage loan tenor to be granted to a home buyer under the WSM and the affordability of the flat to the buyer, and that currently quite a number of HOS flats are ageing with their remaining guarantee periods becoming shorter, whether the HA will consider extending the guarantee periods for HOS flats; if not, of the reasons for that; and

(3) given that only 10 per cent out of a quota of 4 500 was allocated to single persons under the new round of WSM launched in February this year, whether the HA will consider adjusting upward the quota for single persons, so as to increase the chance of single-person applicants in buying HOS flats; if not, of the reasons for that?

Reply:

President,

     In response to the aspirations of low-and middle-income families to buy their own homes, the Hong Kong Housing Authority (HA) launched an Interim Scheme to extend the Home Ownership Scheme (HOS) Secondary Market to White Form buyers since 2013 so as to enrich the housing ladder. After a review and taking into account the sustained demand for Subsidised Sale Flats Scheme (SSFS) flats from White Form buyers, the HA endorsed the regularisation of the Interim Scheme as the White Form Secondary Market Scheme (WSM) from 2018.

     To encourage banks and authorised financial institutions to provide better mortgage terms for purchasers of SSFS flats, the HA provides a mortgage default guarantee to the participating financial institutions. In accordance with the Deed of Guarantee (DoG) entered between the HA and the participating financial institutions, the HA undertakes to meet the shortfall in repayment in the event of default by the mortgagors of SSFS flats, under specified circumstances during the mortgage default guarantee period as set out in the applicable DoG. The mortgage default guarantee applies to SSFS flats in the primary market and under the Secondary Market Scheme.

     As provided in the prevailing DoG, the maximum mortgage default guarantee period for flats under the HOS and Green Form Subsidised Home Ownership Scheme (GSH) is 30 years counting from the date of the first assignment of the flats.
 
     My consolidated reply to the Hon Leung Man-kwong’s question is as follows:

(1) and (2) According to the information, the total number of HOS/GSH flats with premium unpaid is 271 000 as at the end of March 2022. As some of the HOS flats were put up for sale in the early years and the HA does not have the information on the date of first assignments of these flats, we cannot work out the residual mortgage default guarantee period of all HOS flats. If it is assumed that the completion date of the HOS/GSH developments concerned is the same as the date of first assignment of all the flats in the same development, we could roughly estimate the residual mortgage default guarantee period of these flats. There are about 24 000 flats with a residual period of more than 20 years to 30 years, about 5 000 flats of more than 10 years to 20 years and about 76 000 flats of 10 years and below. 

     Considering the financial risk borne by the HA should be controlled at a suitable level, the HA currently provides a maximum mortgage default guarantee period of 30 years to participating financial institutions. The HA’s mortgage default guarantee period is only one of the factors for reference by banks and financial institutions in granting mortgage loans. Banks and financial institutions may provide different mortgage terms according to the actual circumstances of individual mortgage applications, such as the repayment ability and financial position of applicants as well as other relevant factors. As regards the mortgage repayment period, while the HA has required banks and financial institutions to grant mortgage loans not exceeding 25 years, it does not stipulate that the mortgage repayment period has to expire with the mortgage default guarantee period. In practice, banks or financial institutions will provide mortgages based on their commercial considerations and individual circumstances of mortgage applicants. Therefore, the HA has no plan to extend the mortgage default guarantee period. Nevertheless, the HA will keep in view the need for extending the mortgage default guarantee period from purchasers of SSFS flats and participating financial institutions providing mortgages as well as the financial risk to be borne by the HA; and will examine the subject at appropriate time.

(3) When the HA endorsed the extension of the HOS Secondary Market to White Form buyers under the Interim Scheme in September 2012, it had taken into account the needs of family applicants and one-person applicants for SSFS flats. At that time, considering that family applicants had more pressing need to purchase a flat as compared to one-person applicants, the HA set the allocation ratio for family and one-person applicants at 9:1. This was in line with the arrangements for other subsidised housing policy where higher priority is allocated to family applicants. The same allocation ratio was also adopted when regularising the WSM in 2018.

     Before the launch of each WSM exercise, the HA will discuss and endorse the implementation details of the exercise including the allocation ratio for family and one-person applicants. Taking into account the fact that demand from White Form applicants remains strong and that there has been no significant change in the proportion of family and one-person applicants in the past WSM exercises, the HA therefore endorsed in January 2022 to maintain the allocation ratio for family and one-person applicants at 9:1 when WSM 2022 was launched, apart from keeping the annual quota at 4 500. The HA will suitably take into account the prevailing situation (such as the utilisation of annual quota in the previous WSM exercise, the number of family and one-person applicants and other relevant factors) and the views of stakeholders when considering the allocation ratio in future exercises, and adjust such ratio as and when necessary.

     Thank you, President. read more

     â€‹In light of positive test results for the COVID-19 virus from sewage samples collected in Yuen Long and Sai Kung Districts, the Home Affairs Department (HAD) said today (June 8) that the Yuen Long District Office (YLDO) and the Sai Kung District Office (SKDO) have distributed a total of about 89 000 COVID-19 rapid test kits to households, cleansing workers and property management staff living and working in the Districts.

     The YLDO distributed rapid test kits to households, cleansing workers and property management staff living and working in Park Signature, Yee Fung Garden, Crystal Park, Greenery Place, Springdale Villas, Covent Garden, Villa Art Deco and residential premises around Yuen Long On Hing Street, Kau Yuk Road and Fung Lok Lane for voluntary testing through the property management companies and the owners’ corporation.

     In addition, the SKDO distributed rapid test kits to households, cleansing workers and property management staff living and working in Bauhinia Garden, Yung Ming Court, The Papillons and SAVANNAH for voluntary testing through the property management companies.

     The HAD made the above arrangements in the hope of identifying infected persons early.

     Members of the public may refer to the demonstration video produced by the Centre for Health Protection (CHP) under the Department of Health (DH) via www.youtube.com/watch?v=yzFAUzTtmKk to learn how to use the rapid antigen test (RAT) kit.

     Persons testing positive through an RAT should take a photo of the test result and declare the result within 24 hours via the Declaration System for Individuals Tested Positive for COVID-19 Using Rapid Antigen Test (www.chp.gov.hk/ratp). If members of the public encounter difficulties in using the online platform, they can call the automated system at 183 6119 to register their identification document and telephone number. The CHP under the DH will contact the relevant person later to complete the report procedure. There is no need to declare negative test results.

     The Government appeals for the co-operation of members of the public to safeguard the health of themselves and their families by undergoing testing on a voluntary basis and fighting the virus together. The Government urges all individuals who are in doubt about their own health condition, or individuals with infection risks (such as individuals who visited places with epidemic outbreaks or had contact with cases that tested positive), to undergo testing promptly for early identification of infected persons to reduce the transmission risks of COVID-19.

    

     The Food and Environmental Hygiene Department (FEHD) has all along been committed to combating the sale of chilled or frozen meat disguised as fresh meat, and in a blitz operation today (June 8) raided a licensed fresh provision shop (FPS) in the Chai Wan district suspected of selling chilled meat as fresh meat. 

     During the operation, FEHD officers raided a licensed FPS at Siu Sai Wan Road, Chai Wan, and destroyed about 178 kilograms of suspected chilled meat found. The licensee of the FPS is suspected of breaching the licensing condition for the display and sale of chilled meat as fresh meat, and the FEHD is proceeding with the cancellation of the FPS licence. 

     In addition, FEHD officers also initiated two prosecutions against the licensee of the FPS for dirtiness of the premises and dirty equipment. At the same time, FEHD officers also collected a pork sample for testing of preservatives and prosecution will be initiated for any contravention of relevant legislation. 

     A spokesman for the FEHD said, “Selling of chilled or frozen meat disguised as fresh meat breaches the licensing condition and causes food safety problems. Also, the operation of these profiteers is unfair to other shops that comply with the requirements.”

     The spokesman added, “Anyone selling chilled or frozen meat without permission commits an offence and is liable to a maximum fine of $50,000 and six months’ imprisonment on conviction. The department will continue to conduct regular inspections at licensed FPSs and market meat stalls, and will actively handle the complaints received. In detecting any irregularities, the FEHD will carry out immediate investigation and take appropriate enforcement action. In addition, the FEHD also proactively investigates suspected violations from time to time and conducts surprise inspections and enforcement action as necessary. If there is sufficient evidence, prosecutions will be initiated and follow-up action will be taken on the breach of licensing conditions or tenancy agreements. The licences of fresh provision shops breaching the licensing conditions may be cancelled, while the tenancies of market meat stalls breaching the tenancy agreements may be terminated.”

     The spokesman stressed that the FEHD is very concerned and has been committed to combating the sale of chilled or frozen meat disguised as fresh meat by taking stringent enforcement action against the violations.

  

     The Government today (June 8) exercised the power under the Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation (Cap. 599J) to make a “restriction-testing declaration” (declaration) effective from 6pm, under which people (hereafter referred to as “persons subject to compulsory testing”) within the specified “restricted area” in Ma On Shan (i.e. Tower 1, Lake Silver, Ma On Shan, and certain designated area of the podium; excluding levels below the podium, see Annex) are required to stay in their premises and undergo compulsory testing. Persons subject to compulsory testing are required to stay in their premises until all such persons identified in the “restricted area” have undergone testing and the test results are mostly ascertained. The Government aims at finishing this exercise at around 11am tomorrow (June 9). The operation may be extended depending on test results.
 
     A Government spokesman said, “Under Cap. 599J, the Government can, according to the needs of infection control, make a ‘restriction-testing declaration’. Having reviewed a basket of factors, including the viral load in sewage, the information of relevant positive cases, and other circumstantial factors, and conducted a risk assessment, the Government decided to make a ‘restriction-testing declaration’ for the relevant area.”
 
     The Government will set up temporary specimen collection stations at the “restricted area” and request persons subject to compulsory testing to undergo testing before 11pm today. Arrangements will be made for persons subject to compulsory testing to undergo a nucleic acid test at specimen collection stations where dedicated staff will collect samples through combined nasal and throat swabs. Persons subject to compulsory testing must stay at their place of residence until all test results are ascertained to avoid cross-infection risk. The Government will make arrangement to facilitate specimen collection for people with impaired mobility. All persons in the “restricted area” who have tested positive in the past 14 days, including positive cases identified either by nucleic acid tests recorded by the Department of Health (DH) or by rapid antigen tests that have been self-declared to the DH, are not required to undergo testing in this compulsory testing exercise.
 
     The Government spokesman said, “We understand that this exercise will cause inconvenience to the public. The Government has made arrangements to carry out testing for all persons present in the ‘restricted area’ as soon as possible. The aim is to strive to complete testing of all identified persons subject to compulsory testing and confirm the results, and finish the exercise at around 11am tomorrow. The Government will make a public announcement when the declaration is revoked officially. In the cases in which employees are unable to go to work because of the declaration, the Government hopes their employers can exercise discretion and not deduct the salaries or benefits of the employees.”
 
     If staying in the “restricted area” will cause unreasonable hardship to individuals who are not residents in the area when the declaration takes effect, government officers may exercise discretion and allow that person to leave the area after considering the individual circumstances. That person must have followed the instructions to undergo testing and leave his/her personal information for contact purposes.
 
     According to the compulsory testing notice to be issued today, any persons other than those specified above who had been present at the above building for more than two hours from June 2 to June 8, 2022, even if they were not present in the “restricted area” at the time when the declaration took effect, must undergo compulsory testing on or before June 10, 2022. As a mutant strain is involved, for prudence’s sake, vaccinated persons and persons who have recently been tested are also required to undergo testing.
 
     The Government appeals to persons subject to compulsory testing for their full co-operation by registering and undergoing testing, and waiting for the results patiently at home. The Government will strictly follow up on whether the persons concerned have complied with the compulsory testing notices and “restriction-testing declaration”. Any person who fails to comply with the compulsory testing notices commits an offence and may be fined a fixed penalty of $10,000. The person will also be issued with a compulsory testing order requiring him or her to undergo testing within a specified time frame. Failure to comply with the compulsory testing order or the “restriction-testing declaration” is an offence and the offender would be liable to a fine at level 5 ($50,000) and imprisonment for six months. read more