Hot money needs cooling

Mainland and HK monetary authorities must make joint efforts to reduce risks from inflows of speculative capital

A series of monetary easing measures by the United States and some European countries since August, aimed at curbing their debt crises and stimulating economic growth, has added huge liquidity to the international financial market and complicated the economic and financial environment facing emerging countries.

A recent Citigroup report indicates that the flow of global capital from developed countries to emerging markets has accelerated following the adoption of the third round of quantitative easing by the US Federal Reserve. More than 80 percent of it flowed to the Hong Kong Special Administrative Region and the Chinese mainland from late September to the end of October. Besides preying on the yuan's exchange traded fund, Hong Kong H shares and yuan-denominated financial products are also the targets for international hot money.