Hong Kong’s largest local bank forecasts rate hikes and has embraced the crypto market. It has established guidelines for virtual asset companies to adhere to while operating.
The US Federal Reserve’s interest rate meeting this week has caught the attention of the global market, with the possibility of an interest rate hike generating high anticipation. Lin Yansheng, Director of Commercial Banking at Hang Seng Bank, the largest local bank in Hong Kong, shares his expectations, predicting a temporary rise in interest rates.
In response to the mounting concerns, the bank recognizes the significance of cryptocurrencies. It has established guidelines for virtual asset businesses to follow while conducting operations.
According to the bank’s announcement, these businesses can open standard banking accounts after obtaining an Approval-in-Principle (AIP) license from the Securities Regulatory Commission.
Hong Kong’s High-Interest Rates and Loan Growth Concerns
Lin Yansheng, Director of Commercial Banking at Hang Seng Bank, acknowledges the impact of Hong Kong’s higher interest rates, leading to a slowdown in demand for bank loans compared to mainland and neighboring regions.
Despite the current situation, Yansheng offers optimism, stating that interest rates are likely to decrease soon, potentially leading to an improvement in loan growth next year.
According to the Hong Kong Monetary Authority’s recent statistics, annualized loan growth has been negative since May, at -1.1%. Yansheng attributes this downturn to the mainland’s borrowing rates decreasing, affecting Hong Kong’s banking industry.
Yansheng predicts that the US Federal Reserve will raise rates one more time and maintain that level for several months. However, he expects a rate cut next year, influenced by the slowdown of US inflation to 3% in June.
Regarding trade financing, Yansheng observes that high-interest rates have shifted the management of trade financing to neighboring regions, with some companies even relocating to Southeast Asia due to pressures on the mainland’s manufacturing industry.
China and Hong Kong Discuss Challenges for Virtual Asset Businesses
Roundtable meetings between the China Securities Regulatory Commission and the Hong Kong Monetary Authority have been held to address the obstacles faced by virtual asset businesses.
Yansheng emphasizes Hang Seng Bank’s commitment to adhering to regulator instructions and supporting these companies.
Only OSL and Hashkey, two virtual asset trading platforms, have managed to obtain clearance so far. The challenging procedure for obtaining AIP certification has resulted in few inquiries from other businesses, making it difficult for most to meet the demanding requirements.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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