This undated photo shows Financial Secretary Paul Chan Mo-po. (PARKER ZHENG / CHINA DAILY)

Financial Secretary Paul Chan Mo-po said on Tuesday that the Hong Kong dollar remains strong on sustained capital inflows. This speaks volumes about how the passing of National Security Law has recreated law and order in the city and helped the protest-hit Asia’s financial center maintain a stable investment environment.

The financial chief refuted “groundless speculation” that the legislation has weakened investor confidence and sparked an exodus of capital from of the city during a webinar on “one country, two systems” and the Basic Law.

The financial chief refuted “groundless speculation” that the legislation has weakened investor confidence and sparked an exodus of capital from of the city during a webinar on “one country, two systems” and the Basic Law

The legislation was passed unanimously on June 30 by the National People’s Congress Standing Committee, the country’s top legislature

Chan said since April this year, the Hong Kong dollar has continued to trade near the strong end of its trading band. The Hong Kong dollar traded at 7.7506 per greenback at 4:20 pm, close to its 7.75 limit.

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The Hong Kong dollar was pegged at a fixed rate of 7.8 to the US dollar in October 1983. Since May 2005, it has been allowed to move between a narrow range of 7.75 and 7.85.

The stronger side of the band at 7.75 has been under threat many times this year, with the Hong Kong Monetary Authority intervening to sell local currency to stop it from appreciating. The HKMA last intervened to defend the strong end of the peg in 2015.

The HKMA so far this month has seen inflows of more than US$12.9 billion (HK$100 billion), Chan said.

As local borrowing costs have come down and Hong Kong stocks continue to rally, with daily trading volumes exceeding HK$200 billion several times in July. On July 6, the daily turnover amounted to HK$251 billion, marking a record high since March 23 in 2018.  This proves that demand for the Hong Kong dollar remains strong on constant capital inflows, said Chan, adding that the National Security Law has what it takes to help the city maintain a stable investment environment.

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“Over the past chaotic year, Hong Kong has been rocked by violent protests and secessionist activities, giving a wake-up call to the alarming gaps in national security strategies,” Chan said.

“The passing of National Security Law, indeed, closes the legal loopholes and provides institutional support for national security, preventing Hong Kong from being utilized as a tool to break up our country. It also helps restore law and order in Hong Kong and ensures the city embarks on a course of smooth sailing under ‘one country, two systems’,” Chan said.