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The
outflows, which equate to nearly 1.25% of Hong Kong's gross
domestic product, began when protests broke out against a
proposal to allow extradition to mainland China. The protests
led to violent clashes and retail sales plunged, pushing the
city into its first recession in a decade.
"These political tensions pose risks, given Hong Kong's position
as a major financial center," the BoE report said.
The BoE monitors Hong Kong because UK banks such as HSBC and
Standard Chartered are also the leading banks in Hong Kong.
The banks have passed the BoE's stress test, which modeled a
fall of almost 8% in Hong Kong's GDP and a slump in property
prices by more than half.
"According to the latest statistics on deposits and money
supply, as well as the latest financial market situation, there
was no noticeable outflow of funds from Hong Kong dollar or from
the banking system," a spokeswoman for the Hong Kong Monetary
Authority, Hong Kong's central bank, said in an email.
The Hong Kong dollar rallied to a five-month high last week.
The spokeswoman added that the $5 billion in the BoE's report
referred to portfolio capital changes via investment funds,
which "could mean asset reallocation by or among investors and
may not involve conversion of currencies, and therefore it does
not necessarily lead to fund outflows from Hong Kong dollars or
Hong Kong's banking system."
(This story restores missing word in first paragraph)
(Reporting by Noah Sin and Alun John; editing by Arun Koyyur,
Larry King)
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