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HK Equity Fund: America’s largest creditors are growing more nervous as the budget impasse in Washington drags on into its third week According to Hong Kong based HK Equity Fund, Finance officials in China and Japan are growing more concerned at the apparent inability of Congress to reach an agreement that would end the two week-old partial shutdown of the US government. The shutdown, in and of itself, is not seen as the major issue; it is the matter of raising the debt ceiling – the maximum amount the US Treasury can borrow – in time to avoid a situation whereby the government can no longer afford to meet its obligations. Between them, China and Japan – the number 2 and number 3 largest global economies – own more than $2 trillion of US Treasury debt upon which Washington must pay interest. A failure to raise the debt ceiling would make it impossible for the Treasury to roll over its existing debt as it becomes due and would likely lead to a technical default that would be catastrophic both for the global economy and the investments of the two biggest holders of US Treasury bonds. A HK Equity Fund analyst said, “The collapse of Lehman Brothers was calamitous but this would be far, far worse. It doesn’t bear thinking about.” On the 17th October, the US government will be unable to pay its bills and technically be in default. “Even now, there is still an unshakeable belief that there is no way Congress will allow a default to happen. We still subscribe to that belief and feel the impasse is more about creating political theatre aimed at warning China that, despite its continued financial importance to America, the fate of both nations are closely aligned,” concluded the HK Equity Fund analyst. About HK Equity Fund HK Equity Fund established a presence in Hong Kong in 1995. Today their Hong Kong office is their main hub in the Asia-Pacific region. All of HK Equity Fund’s business groups have operations in the city, making this their largest office in the region outside Australia. From Hong Kong they offer corporate finance and advisory, institutional cash equities and research, equity derivatives and structured products, debt financing and funds management, and environmental financial products, futures, metals OTC hedging and fixed income trading services. For more info contact: HK Equity Fund Limited 28/F, 8 Wyndham Street, Central, Hong Kong Email Address: info@hkequityfund.com http://www.hkequityfund.com +85258084873
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HK Equity Fund, Hong Kong, US Treasury, Lehman Brothers, debt, creditors,
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