How Hong Kong’s ETF Is Staying Afloat

June 1st at 12:00pm by Tom Lydon

images82 Hong Kong is taking aggressive measures to ensure the country does not go into a long slump in an attempt to rally markets and related exchange traded funds (ETFs).

A $2.2 billion stimulus of sorts is in the making in Hong Kong. The country, like many of those in Asia, is spending the money on tax cuts and fee waivers for citizens to stave off a deeper slowdown within the economy. Likewise, the country will do more if the condition gets worse, since this is the biggest slowdown since the Great Depression, reports Theresa Tang and Kevin Hamlin for Bloomberg.

Fees for business registrations and for entertainment and restaurant licenses will be dropped for a year. The government will waive property rates for two more quarters.

On the other hand, so-called “giveaways” that residents had expected will not materialize. The government also has a budget surplus instead of a deficit that had been expected.

Meanwhile, the liquidity in Hong Kong kept the local unit strong against the U.S. dollar late Friday, and pushed the benchmark Hang Seng Index to close above the psychological 18,000 mark. Economists do not expect much more flow-driven rallies in the second half of the year, with large capital outflows from Hong Kong not likely, reports Aries Poon for The Wall Street Journal.