A Framework for Monitoring Capital Flows in Hong Kong

In this paper we attempt to delineate conceptual issues relating to the definition of capital flows, and introduce a framework that organises survey data and accounting information at different time horizons to form a judgment on the nature and scale of fund flows in Hong Kong. Given the complexity of international financial transactions in Hong Kong, cross-border capital flows may not correspond closely to fund flows into and out of the Hong Kong dollar. A comprehensive view on the scale and nature of capital flows in Hong Kong requires the joint analysis of both monetary and Balance of Payments statistics, in addition to information gathered through market intelligence. We then apply the monitoring framework to analyse four episodes of large fund flows between 2003 and mid-2009.