Money supply continues decrease in March

Money supply continued to drop in March following currency in circulation dropping by some 5.7 per cent, whilst demand deposits grew very slightly by a month-on-month 0.9 per cent, the latest official data released yesterday by the Monetary Authority (AMCM) showed. According to AMCM, money supply (M1) had dropped slightly by 0.6 per cent from one month earlier, at MOP60.4 billion (US$7.55 billion). Meanwhile, supply of M2, which is the sum of M1 and quasi-monetary liabilities, also decreased slightly by 0.8 per cent year-on-year to MOP477.6 billion. Although the two types of money supply posted slight month-on-month declines, on a year-on-year comparison, M1 and M2 had increased by 5.4 per cent and 4.9 per cent from March 2014, respectively. The Hong Kong dollar is the main currency in M2, its share of which accounts for 49.8 per cent of the total, down 0.4 percentage points month-on-month but up 0.1 percentage points from one year ago. The local currency – the pataca (MOP) – accounts for 27.5 per cent of the total M2, up 2.9 percentage points from a year earlier. The share of Chinese yuan (CNY) in M2, meanwhile, remained at 11.9 per cent of the total as in February, but represents a decrease of 4.7 percentage points year-on-year. The share of the United States dollar (USD) was up 0.4 percentage points month-on-month or 1.7 percentage points year-on-year, accounting for 8.5 per cent of the total. Deposits drop On the other hand, total deposits in local banks registered a month-on-month decrease of 0.5 per cent to MOP816.1 billion, driven by the decrease in private sector deposits. The AMCM data indicated that residents’ deposits in March totalled MOP466.2 billion, which is a decrease of 0.7 per cent month-on-month. In addition, non-resident deposits in the banks of the Special Administrative Region fell by 3.4 per cent to MOP236.5 billion. By contrast, public sector deposits in the banking sector increased by 7.2 per cent to MOP113.4 billion from February. According to AMCM, most of the total deposits were denominated in HKD, accounting for 41.4 per cent of the total. The MOP, CNY and USD, meanwhile, occupied 19.7 per cent, 13.7 per cent, and 20.6 per cent of the total, respectively. Loans increased Meanwhile, domestic loans in the city in March posted a month-on-month increase of 2.3 per cent, amounting to MOP354.2 billion. Some 66 per cent of the loans were denominated in HKD, totalling HKD233.8 billion, while some MOP95.2 billion was MOP-denominated, accounting for 26.8 per cent of the total. Loans denominated in CNY and USD only accounted for 0.5 and 6.2 per cent of the total, amounting to MOP1.9 billion and MOP21.8 billion, respectively. In addition, external loans declined marginally by 0.1 per cent to MOP354.6 billion, of which more than half, or 55.3 per cent, was denominated in USD, amounting to MOP196.1 billion. Only some 1.3 per cent of the external loans were denominated in MOP, totalling MOP4.6 billion. As at the end of March, the loan-to-deposit ratio for the residents’ sector rose 0.9 percentage points from February to 61.1 per cent. The ratio for both the resident and non-resident sectors grew by 1.3 percentage points to 86.9 per cent, AMCM said.