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Morgan Stanley

«We expect the linked exchange rate system between USD and HKD to hold despite growing investor concerns,» said a research note from Morgan Stanley strategists, adding that investors should remain defensive and sell near-term rallies. 

«However, if fund outflows increase, this could push spot USD/HKD to the 7.85 ceiling, resulting in a more volatile HIBOR owing to the lower level of aggregate balance in the Hong Kong monetary system.»

Morgan Stanley warns that the HSI could potentially reach 21,500 and revised its 2019 Hong Kong GDP growth projection to -0.3 percent (from 1 percent growth).