Hong Kong recorded a $10.1 billion surplus in its balance of payments account, at 2.9% of GDP, in this year's second quarter, compared with an $11.5 billion surplus in the first, the Census & Statistics Department says.

Reserve assets correspondingly grew by the same amount in the second quarter. Of the major balance of payments components, there was a $15.2 billion current-account surplus in the second quarter, down on the $36.6 billion one seen in the first. At the same time, a $16.8 billion net outflow of financial non-reserve assets was recorded, also smaller than the $37.3 billion seen in the first.

The current-account surplus in the second quarter was characterised by a surge in the visible trade deficit, an increase in the invisible trade surplus, a reverse net outflow of external-factor income, and a continued net outflow of current transfers.

Trade surplus recorded

With imports of goods increasing faster than exports, the visible trade deficit rose to $35.4 billion in the second quarter. The invisible trade surplus grew to $61.9 billion, with service exports having increased more than imports of services. Overall, a combined visible and invisible trade surplus of $26.6 billion was recorded in the second quarter, smaller than the $31.2 billion seen in the same quarter last year.

On factor income flows, external-factor income inflow and outflow amounted to $163.8 billion and $171.5 billion in the second quarter, thus yielding a net outflow of $7.6 billion, against a net inflow of $4.8 billion a year earlier.

A current-transfer outflow of $5.5 billion and an inflow of $1.8 billion was recorded in the second quarter, resulting in a net outflow of $3.8 billion, slightly smaller than the $3.9 billion seen in the same quarter last year.

Comparing this year's second quarter with the first, the visible trade deficit rose from $29.8 billion to $35.4 billion, while the invisible trade surplus fell slightly from $62.6 billion to $61.9 billion. Concurrently, the external factor income shifted from a net inflow of $8.1 billion to a net outflow of $7.6 billion, while the net outflow of current transfers fell from $4.3 billion to $3.8 billion.

In the second quarter, a net inflow of capital transfers was estimated at $500 million, as against a net outflow of $400 million in the first.

An overall net outflow of financial non-reserve assets amounting to $16.8 billion was recorded in the second quarter, smaller than that of $37.3 billion in the first. This was the combined result of a $29.9 billion net outflow of direct investment, a $78.3 billion net outflow of portfolio investment, a $14.5 billion net inflow due to cash settlement of financial derivatives, and a $76.9 billion net inflow of other investment.

Reserve assets up

Reserve assets went up $10.1 billion, as compared with an increase of $11.5 billion in the first quarter. The accumulation in reserve assets was mainly due to income from foreign currency assets during the quarter.

At the end of June, Hong Kong's gross external debts amounted to $3.67 trillion, equivalent to 258% of GDP. A major proportion of the external debts was due to transactions of the banking sector, accounting for 64.3% of the total. This was followed by debt liabilities to affiliated enterprises and direct investors under direct investment, with a share of 25.4%.

Compared with the end of March, gross external debts rose $204.1 billion.