【Hong Kong Dollar Fixed Deposit】 4-month HKD fixed deposit with a maximum interest rate of 2.65%, earning 8,800 HKD in interest. Additionally, 10 small and medium-sized banks follow HSBC to cut interest rates.

The fourth day of the US-Iran conflict, HSBC cut Hong Kong dollar fixed deposit interest rates yesterday. Today (March 3), ten banks, including smaller and larger banks like ICBC Asia, also lowered rates, with short-term deposits remaining the hardest hit. While the market hopes for a shift from short-term cuts to longer-term increases, unfortunately, three Hong Kong banks just cut long-term rates, and CCB Asia more comprehensively reduced medium- and long-term rates. HSBC, Hang Seng, and Standard Chartered rarely cut rates in turn, with Standard Chartered even removing the 0.02% six-month rate. Fortunately, Bank of China Hong Kong temporarily held steady. Another surprise is Dah Sing Bank increasing rates against the trend, but such small moves often lead to “self-market signals,” making them poor indicators. The market expects the rate cut wave to continue at least until mid to late this month, with a possible turnaround only near the end of the first quarter.

Click the chart 👇👇👇👇 to see a 4-month comparison of HKD deposit rates.

▼Click the image to enlarge

Today’s moves by Hong Kong banks:

Rate hikes:

• Dah Sing Bank: Yesterday cut, today increased—raised 3-month and 6-month rates by 0.1%, now at 2.4% and 2.3% respectively.

Rate cuts:

• DBS: Reduced 2-month rate by 0.6% to 1.6%
• ICBC Asia: Reduced 98-day rate by 0.1% to 2.4%
• CCB Asia: Fully lowered short-, medium-, and long-term rates by 0.05%, with the 1-year rate at 2.05%
• CCB: Yesterday increased, today decreased—3-month rate down 0.1% to 2.5%
• Chiyu Bank: Reduced 3-month rate by 0.05% to 2.45%
• BOC International: Two consecutive reductions of 3-month rate, total cut of 0.07% to 2.38%
• PABank: Slightly reduced 3-month rate by 0.05% to 2.75%
• Public Bank: Two days of reductions, total cut of 0.2% over a year to 2.1%
• Bank of Communications Hong Kong: Reduced 1-year rate by 0.1% to just below 2%
• AirStar Bank: Reduced 1-year rate by 0.05% to 2.5%

Four IPOs compete for subscriptions, locking in hundreds of billions; overnight interest rates turn higher

Four new stocks are competing, with the hot IPOs overshadowing the black swan events. Brokerage firms have at least frozen over HKD 100 billion in margin financing, and overnight rates have turned up to 2.12%, after falling previously; the 1-month interbank rate has fallen three consecutive times to 2.3%. The total bank system balance slightly increased to HKD 53.912 billion, compared to HKD 44.611 billion before the “funding” rush, a difference of HKD 9.301 billion.

The HKD exchange rate this morning ranged from 7.8172 to 7.8222. Tensions between the US and Iran remain high, with the US dollar index slightly retreating from 98.66 to 98.506.

The four IPOs entered their third day of offering amid tense clouds. Yoolas, a Chinese packaging service provider, led the charge, with brokerages lending at least HKD 46.3 billion in margin financing, oversubscribed 1,625 times. Zhaowei Electronics borrowed HKD 8.67 billion, oversubscribed 439 times. Chinese wireless communication modules and solutions provider Megatech Smart temporarily borrowed HKD 5.2 billion, oversubscribed 50 times. Chinese industrial robot manufacturer Estun has borrowed over HKD 2 billion, oversubscribed 11 times.

The highest-yielding three-month deposits are now at the top, with Nanshan Bank reclaiming the 4-month top spot

In the first two trading days of March, more than ten banks and smaller lenders adjusted deposit rates, causing a major reshuffle in the top high-interest rates for three deposit terms:

• 2 months: Fubon at 2.25% (due to DBS at 6% and Hang Seng at 5% maturing at the end of February)
• 4 months: Nanshan at 2.65% (after Fubon cut 0.1% yesterday to 2.55%)
• 1 year: PAObank and WeLab Bank at 2.8% (after Fubon’s 2.85% matured last Sunday)

Currently, March is the last month of the first quarter, but large and small banks in Hong Kong and mainland China are still easing off, not rushing to lock in deposits as in previous years when the season approached. This may be related to the banking liquidity situation, especially since HKD deposits increased in January. Additionally, with global attention on Middle East conflicts, the industry’s high-interest deposit strategies face limited lending opportunities.

Hong Kong bank loans remain strong, surging nearly 13% in January

According to the HK Monetary Authority, total deposits with authorized institutions fell slightly by 0.1% in January, but HKD deposits rose by 1.3%, while foreign currency deposits declined by 1.1%, mainly reflecting corporate cash flows.

Hong Kong bank lending performed well early this year. The HKMA reported that in January, annualized loans increased by 12.9% year-on-year; December’s growth was even 16%. Total loans and advances increased by 1.1% in January. Loans used within Hong Kong (including trade financing) rose 0.7%, and those used outside Hong Kong increased 2.2%. Since HKD deposits grew faster than HKD loans, the HKD loan-to-deposit ratio fell from 72.9% at the end of December to 72.3% at the end of January.

HKD money supply M2 and M3 both increased by 1.1% in January, up 3.8% compared to the same period last year.

Additionally, after HSBC launched a low-interest fixed-rate plan last year, other major banks are now offering similar plans. Reports indicate Hang Seng Bank reintroduced fixed-rate products after 2018, with the first three years at 2.73%, lower than H-Loan’s 3.25%.

US Court of Appeals rejects delay in tariff refunds, initiating HKD 100 billion refunds

Amid ongoing external tensions, the US Supreme Court previously ruled that most of President Trump’s tariffs were invalid. The Department of Justice later appealed to the federal appellate court, requesting an additional 90-day buffer to give the executive and legislative branches time to consider options, potentially delaying the process by up to four months. However, the federal circuit court rejected this request, allowing the tariff refund process to proceed swiftly.

This ruling clears obstacles for lower courts, including the US International Trade Court, to start legal procedures related to tariff refunds. DOJ lawyers estimate that the refund process could take several years. Following the Supreme Court’s decision, hundreds of companies have filed lawsuits seeking tariff refunds, with over 2,000 cases pending.

The Trump administration has stated that if the Supreme Court ultimately rules that nearly all US trade partner tariffs are illegal, the government will issue refunds.

Supreme Court rules IEEPA does not authorize president to impose tariffs

In a 6-3 decision, the Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not grant the president the authority to impose tariffs.

JPMorgan CEO warns escalating US-Iran tensions could trigger inflation and economic downturn

JPMorgan Chase CEO Jamie Dimon predicts that global cyberattacks or retaliatory terrorist actions will increase. While the economy is currently stable and asset prices high, market sentiment is overly optimistic—something that has persisted for years. He warns that worsening conditions could lead to inflation and economic decline.

Additionally, global focus is on whether the upcoming “Xi-Trump” summit at the end of the month can proceed as scheduled. The US’s surprise attacks on oil-producing Iran are expected to increase bargaining chips with China, though China has refused to comment on whether Trump will visit China from March 31 to April 2. Reports suggest US Treasury Secretary Mnuchin and Chinese Vice Premier He Lifeng may meet next week in Paris to prepare for a possible summit.

Citi notes that evolving geopolitical tensions add uncertainty to Trump’s planned China visit. However, the current environment might make China more willing to purchase US energy, as the US aims to control over half of global oil production through military actions in Iran and Venezuela, amid de-dollarization trends. Since Iran is a major supplier of Chinese crude oil, with transactions settled in RMB, China’s foreign reserves have seen a declining dollar share in recent years. Trump’s push for war aims to enable Israel to control Middle Eastern oil-producing countries, reasserting US dominance over oil pricing and maintaining the petrodollar system.

Given the unpredictable political landscape, short-term traders might consider shifting “disaster wealth” into fixed deposits, earning interest. Currently, the highest four-month rate is 2.65% at Nanshan Bank, with a HKD 1 million deposit earning HKD 8,833 in interest.