Hong Kong liquidity dwindles mid-November as aggregate balance falls HK$10m

The monetary base has also declined again.

It has been noted that the HKMA aggregate balance had fallen HK$10m to reach HK$239.2b in the week ended 21 November.

According to a research note from CCB International, meanwhile, Hong Kong’s monetary base fell HK$1.2b over the past week to reach HK$1,339.6b.

It noted that this is the second week in a row the monetary base has declined.

Here's more from CCB International:

Hong Kong dollar weakens to 7.758 last week. The HK-dollar exchange rate against the US dollar weakened from 7.755 two weeks ago to 7.758 last week.

This was the second consecutive week of decline for the Hong Kong dollar.

Both the VIX and Hong Kong Volatility Index fell last week, from 13.31 and 17.48 two weeks ago to 12.90 and 14.24, reflecting improving market sentiment.

Hong Kong bond yield remains stable at 1.88% last week. We believe Hong Kong’s risk-free rate will begin to rise along with US monetary policy, which we anticipate will soon return to a more normal stance.

Hong Kong’s unemployment rate stood at 3.3% in August-October 2014, the same as it was in July-September 2014.

Hong Kong CPI rises 5.2% YoY in October 2014, lower than 6.6% YoY in September. Netting out the effects of the government's one-off relief measures, Hong Kong’s underlying inflation rate in October 2014 was 3.4% higher than the 3.3% posted in September.

The YoY increase in October was mainly due to smaller declines in the prices of fresh vegetables.