Black Monday |Fiscal reserves suffer stock market turmoil losses

The Macau government’s stock investment made with public fiscal reserves – accounting for 11.8 percent of the overall portfolio – has recorded losses due to the recent stock market turmoil.
The Office of the Secretary for Economy and Finance issued a statement yesterday explaining that Macau’s banking system and currency market still remained stable. It pledged that the MSAR government would spare no effort to ensure the stability of the territory’s financial system as well as paying close attention to local banks’ asset quality and the financial market dynamics outside.
Despite the current book loss, the authorities estimate the fiscal reserve investment to record positive returns for the entire year. However, its annual performance will still depend on financial market conditions at year-end.
According to the Office, overall stock investments accounted for 11.8 percent in the government’s fiscal reserve investment portfolio. Of the total stock investment amount of MOP41.3 billion, MOP13.5 billion was invested in the mainland and Hong Kong stock markets, which accounts for 32.8 percent of the stock portfolio and 3.8 percent of the overall investment portfolio.
The Macau authorities are unconcerned by the recent stock market dives in the mainland and Hong Kong, as the local economy and trade are closely linked to the neighboring regions’ financial dynamics.
Citing a series of indicators on the local banking system and money market, the Finance authorities said these sectors were spared from direct impact by the external stock turmoil; instead, they have remained in steady conditions under “rigorous risk management” and “effective currency peg.”
“When it is needed, the MSAR government will also take all necessary measures to maintain Macau’s financial system at stable and operating normally,” stressed the Office. Meanwhile, it appealed to local residents to pay attention to market risks and risk management when investing in stocks. “As of the end of December, 2014, Macau residents held over MOP200 billion in overseas securities, which has been the major means of financial investment for local residents,” it indicated. BY