ICYMI – Moody’s US downgrade sparks concern amongst Hong Kong pension funds | Forexlive

News out of Hong Kong ICYMI.

Hong Kong pension fund managers have warned of potential compelled promoting of US Treasuries after Moody’s downgraded US debt, leaving just one remaining AAA score from Japan’s R&I company.

Under Hong Kong’s Mandatory Provident Fund (MPF) guidelines, funds can solely allocate greater than 10% to Treasuries if the US has a AAA or equal score from an accredited company. The 4 accredited companies are: S&P, Moddy’s, Fitch, and Japan’s Rating & Investment Information (R&I). Only R&I has the US at AAA now.

• The HK Investment Funds Association has urged regulators to make an exception for US Treasuries rated slightly below AAA.

• As of end-2024, HK$484 billion in bond and blended asset funds could possibly be affected.

• The MPFA acknowledged the difficulty, confirming the US nonetheless qualifies underneath present guidelines, however stated it’ll monitor developments and act if crucial.

Hong Kong funds are just one set of funds. If different jurisdictions ought to observe comparable guidelines (all of them do) then compelled promoting might happen. It will not be simply the US bond markets that’s ht. That’s the fear and that is (one of many causes, a biggie) why the downgrade issues.

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