Donald Trump has ordered the removal of exemptions that give Hong Kong special status in America in retaliation to Beijing’s new national security law for the territory. The US president said in a White House press conference on Friday that China’s legislation, which critics have said will undermine free protests in the territory, was “deeply troubling”. Mr Trump said that Hong Kong was no longer sufficiently autonomous from mainland China to enjoy the special privileges with the US in place since it left British control in 1997. “Our actions will be strong, our actions will be meaningful”, Mr Trump said as he listed areas that would be impacted by his announcement. He said the extradition treaty would be affected, vowed to change US travel guidance for the territory and threatened sanctions on officials who undermined Hong Kong’s freedoms…. Nick Note: Lets cut to the chase… Let me tell you what those teleprompter never have been’s don’t know. Their is one and only one serious threat Trump has. In fact he may not even know it yet. Honk Kong has access to the dollar exchange window. That means their currency is pegged to the dollar and investors can convert out of Hong Kong dollars to US dollars at will. Two way trade in the 2 currencies at the peg (fixed rate) is critical. China does not have this facility and will never get this. Chinese Banks and business rely upon Hong Kong financial institutions for their flow of critical US dollars.The HKMA Honk Kong Market authority has full access and privileges to the Fed discount window, US treasury market and the US SWIFTS system. This is critical to maintain the stable peg of the HK$ to the US$. Here is the formula used to calculate the risk:
If the HKMA loses its dollar peg and privilege to the US Treasury and money transfer system. Its over roll up your tents and go home. This is a distinct possibility. I can tell you serious people who know how the game is played are VERY concerned. We all know Trump is a lose cannon!