AMCM: Capital flowing into territory in H1

By
Kam Leong

During the first half of this year, the city saw funds flowing in as the total liquidity of patacas rose MOP9.1 billion (US$1.1 billion) to MOP49.6 billion in the six months from end-2014, according to a statistical report on cross-border capital flows released yesterday by the Monetary Authority of Macau (AMCM).
According to AMCM, the city’s monetary base reached MOP38.5 billion as at the end of June, which is an increase of MOP5.1 billion from the end of last year. The authority analysed the cross-border capital flows by evaluating the local money market, the banking sector, the real estate market, and official reserve assets.
Higher capital inflow to the city is attributable to the local bank sector, which saw its net foreign assets fall MOP15.3 billion during the period. The decrease in such assets means a net inflow of funds valued at MOP15.3 billon was registered compared to a net outflow of MOP17.5 billion recorded for the same period of last year.
Official foreign exchange reserve assets held by the monetary authority, meanwhile, also increased MOP12.7 billion from end-2014. Moreover, foreign assets held by the local government in the provisional account of the AMCM and the Fiscal Reserve continued to accumulate, increasing by MOP3 billion in six months to MOP385.6 billion at the end of the first half of 2015.
Outflow
However, capital outflow was registered in the local non-bank sector.
Quoting data provided by the Bank for International Settlements (BIS), AMCM said local residents’ deposits with external banks had increased MOP5.3 billion during the first six months of the year, which led to a net capital outflow of MOP2.6 billion from the city to external banks.
In addition, foreign investment in local real estate impinges on cross-border capital flows in the territory as there was a continued outflow of external funds from the local real estate market during the period, the Authority claimed.
Official data indicated that the total net amount of local properties disposed by non-residents reached MOP2.8 billion during the first half of the year compared to MOP7.7 billion disposed of one year ago. In addition, for residential properties, non-residents’ sales to local residents reached MOP2.7 billion in the six months, although their purchases from residents here only amounted to MOP0.2 billion.
According to the report, for the whole of 2014, the Special Administrative Region registered a net capital outflow of MOP97.1 billion, which was the result of a net inflow of MOP7.5 billion in direct investment, a net outflow of MOP44.8 billion of portfolio investment, a net outflow of MOP62.2 billion in other investments and a net inflow of MOP2.3 billion of financial derivatives.