HK Investors Rush to US Treasuries Amid Dollar Peg Volatility

Hong Kong investors have been buying US Treasuries in large numbers, and it's no surprise why. With its currency pegged to the US dollar, Hong Kong reacts strongly when the Federal Reserve raises interest rates.

The scars from the Fed's aggressive 525-basis-point hiking cycle, which began in March 2022, are still fresh.

When borrowing costs adjust swiftly and sharply, home prices and the Hang Seng Index have tumbled by as much as 16% and 44% from their late-2021 peaks.

In 2022, the Hong Kong Mandatory Provident Fund, which has HK$1.7 trillion ($216 billion) in assets under management as of June, suffered its worst loss since the Global Financial Crisis.