US stocks in Hong Kong dollars: why the peg left S&P 500 returns at +20.6%
From August 2025 to August 2026 the S&P 500 rose 20.3% in US dollars and 20.6% in Hong Kong dollars. The Linked Exchange Rate System keeps the HKD between 7.75 and 7.85, so the currency barely matters. What the HKD's 2026 drift toward 7.85 does and does not mean.
Many Asian currencies moved sharply against the US dollar in 2026. Where the yen, rupiah and peso weakened, US stocks earned more in local money; where the Singapore dollar and ringgit strengthened, they earned less. Hong Kong is different: because of the peg, a US stock return in Hong Kong dollars is almost exactly the US dollar return. This note shows how small the gap is, why, and what the HKD’s 2026 drift toward 7.85 means.
How much did the HKD move against the US dollar in 2025–2026?
Hardly at all. The monthly average went from 7.8260 per US dollar in August 2025 to 7.8425 in August 2026, a 0.2% weakening, and within 2026 it ranged from 7.7965 in January to 7.8425 in August (Federal Reserve H.10 monthly averages via FRED). Figures are Hong Kong dollars per one US dollar, so a higher number means a weaker HKD.
| Date | HKD per USD | Basis |
|---|---|---|
| June 2025 | 7.8486 | Monthly average |
| July 2025 | 7.8496 | Monthly average |
| August 2025 | 7.8260 | Monthly average |
| December 2025 | 7.7808 | Monthly average |
| January 2026 | 7.7965 | Monthly average (strongest month of 2026) |
| August 2026 | 7.8425 | Monthly average (weakest month of 2026) |
| 5 January 2026 | 7.7844 | Daily (strongest of 2026) |
| 12 and 14 August 2026 | 7.8472 | Daily (weakest of 2026) |
| 25 September 2026 | 7.8439 | Daily |
Daily figures are the New York noon buying rate, not the Hong Kong market close. Every figure sits inside 7.75–7.85.
Why does the HKD barely move against the US dollar?
Because Hong Kong has run the Linked Exchange Rate System since 17 October 1983, when the HKD was pegged at 7.80 per US dollar (HKMA: milestones of monetary reform). Since May 2005 the HKMA has undertaken to sell HKD to banks at the strong-side Convertibility Undertaking of 7.75 and to buy HKD from banks at the weak-side Convertibility Undertaking of 7.85 (HKMA: how does the LERS work?).
When outflows push the HKD to 7.85, the HKMA buys HKD, the Aggregate Balance (part of the Monetary Base) shrinks, HKD interest rates rise, and the rate moves back inside the band. Inflows work the other way. Pressure shows up mainly in interest rates and the Aggregate Balance, not in the exchange rate.
From 7.75 to 7.85 is a move of only about 1.3% (calculated from the two Convertibility Undertaking rates). That is why HKD and USD returns on US stocks stay close, provided the peg holds.
What did US stocks return in Hong Kong dollars?
On monthly averages the S&P 500 rose 20.3% in USD and 20.6% in HKD from August 2025 to August 2026; the Nasdaq-100 rose 25.8% and 26.0%. The gap is 0.2 to 0.3 percentage points (index data: FRED SP500, FRED NASDAQ100; monthly figures are averages of daily closes).
What did US stocks return in Hong Kong dollars?
In HKD
Shared linear scale from zero. Selected entries from the table below. Its dates, units, definitions and limitations still apply.
| Period (monthly averages) | Index | In USD | In HKD | Change in HKD per USD |
|---|---|---|---|---|
| Aug 2025 → Aug 2026 | S&P 500 | +20.3% | +20.6% | +0.2% |
| Aug 2025 → Aug 2026 | Nasdaq-100 | +25.8% | +26.0% | +0.2% |
| Dec 2025 → Aug 2026 | S&P 500 | +12.5% | +13.4% | +0.8% |
| Dec 2025 → Aug 2026 | Nasdaq-100 | +16.0% | +16.9% | +0.8% |
S&P 500, monthly averages August 2025 to August 2026, in USD and in HKD (FRED SP500; Federal Reserve H.10 EXHKUS)
The same S&P 500 year looks very different in other currencies. These figures come from the same monthly-average dataset used across this site:
| Currency | S&P 500, Aug 2025 → Aug 2026 (in local currency) | Change in local currency per USD |
|---|---|---|
| Hong Kong dollar | +20.6% | +0.2% |
| Japanese yen | +29.6% | +7.7% |
| Indonesian rupiah | +31.4% | +9.2% |
| Singapore dollar | +19.5% | -0.7% |
| Malaysian ringgit | +15.8% | -3.7% |
A weaker yen and rupiah magnified local investors’ US returns; a stronger ringgit cut them. The HKD sits in the middle, leaving the return almost untouched.
How is it calculated? A HK$100,000 example
The formula is: HKD return = (1 + USD return) × (1 + change in HKD per USD) − 1. For the S&P 500 year: 1.2032 × 1.0021 − 1 ≈ +20.6%.
Suppose HK$100,000 was converted at the August 2025 average of 7.8260 into about US$12,778 and put into the S&P 500. With the index up 20.3% by August 2026, that becomes about US$15,375, which converts back at 7.8425 to about HK$120,575. Had the rate not moved at all, the result would be about HK$120,321. The currency added roughly HK$250 (all calculated from the table figures, excluding dividends, fees, FX spreads and taxes).
Does buying at the HKD’s weakest point make a big difference?
Not much. On daily data the HKD was at its 2026 low of 7.8472 on 12 August and at 7.8439 on 25 September, a change of about −0.04%. Over that stretch the S&P 500 returned −0.1% in both USD and HKD, and the Nasdaq-100 +2.9% in both.
| Start (daily) → 25 Sep 2026 | S&P 500 in USD | S&P 500 in HKD | Nasdaq-100 in USD | Nasdaq-100 in HKD |
|---|---|---|---|---|
| 25 Sep 2025 (one year) | +17.2% | +18.2% | +25.5% | +26.5% |
| 31 Dec 2025 (year to date) | +13.1% | +14.0% | +21.2% | +22.2% |
| 5 Jan 2026 (HKD strongest day) | +12.2% | +13.0% | +20.5% | +21.4% |
| 12 Aug 2026 (HKD weakest day) | -0.1% | -0.1% | +2.9% | +2.9% |
For comparison, the yen’s weakest day was 29 July 2026 at 163.86; from then to 25 September the S&P 500 rose 5.8% in USD but only 1.5% in yen. In Japan the timing of the purchase changed the outcome; in Hong Kong it changes the currency part far less.
What does the HKD sitting near 7.85 mean?
It means outflow pressure is absorbed by the Aggregate Balance and interest rates rather than by the exchange rate. Between late June and mid-August 2025 the weak-side Convertibility Undertaking was triggered 12 times, the HKMA bought HK$119.95 billion, and the Aggregate Balance fell correspondingly to about HK$54 billion (HKMA Currency Board Sub-Committee record). In early May 2025, before that, the strong-side undertaking had been triggered, bringing total inflows of HK$129.4 billion.
| End of month | Balance of the banking system (HK$ bn) | Context |
|---|---|---|
| April 2025 | 45.1 | Before the strong-side triggers |
| May 2025 | 173.4 | After strong-side triggers in early May |
| June 2025 | 164.1 | Weak-side triggers from 26 June |
| July 2025 | 86.6 | Weak-side triggers continue |
| August 2025 | 54.1 | Weak-side triggers until mid-August |
| December 2025 | 57.0 | |
| July 2026 | 54.1 |
The table uses the “balance of the banking system” line in the HKMA’s monthly Currency Board Account (end-July 2026), which is the month-end reading of the Aggregate Balance.
The HKD moved toward the weak side again in 2026, but the HKMA reported no triggers in the periods it has covered. It said the HKD traded between 7.7818 and 7.8387 from 30 December 2025 to 22 April 2026, with HKD interest rates below their US dollar peers encouraging carry trades that sold HKD, and between 7.8289 and 7.8397 from 23 April to 22 June; in both periods the Convertibility Undertakings were not triggered and the Aggregate Balance was stable at about HK$54 billion (June 2026 record, August 2026 record). The Monetary Base was HK$2,080.2 billion at the end of August 2026 and HK$2,080.1 billion at the end of July (Analytical Accounts of the Exchange Fund). The operations report for the period after 22 June had not been published at the time of writing.
For a Hong Kong holder of US stocks this has a simple arithmetic meaning. From 7.8439 on 25 September, the HKD could weaken only about 0.08% more before reaching 7.85, but would strengthen about 1.2% if it went back to 7.75 (calculated from the Convertibility Undertaking rates). As long as the peg holds, the currency effect on HKD returns from US stocks is bounded in both directions. That is the arithmetic of the band, not a forecast.
Local angle: in the US Treasury's annual survey, investors recorded in Hong Kong held US$263 billion of US equities at the end of June 2025, up from US$217 billion in 2024 and US$168 billion in 2023 (TIC report, Table A2). The survey attributes holdings by custodian and holder address, so as a financial centre Hong Kong's figure may include some holdings of investors elsewhere. For how much Hong Kong residents buy abroad overall, see where Hong Kong's current account surplus goes.
Should HKD investors hedge the US dollar?
Hedging costs roughly the short-term interest rate gap between the two currencies; what follows is a rough calculation. The US federal funds target range was raised by 25 basis points on 16 September 2026 to 3.75–4.00%. The HKMA set the Base Rate at 4.25% by its formula and reported that the average of the five-day moving averages of overnight and one-month HIBOR was 2.50% (HKMA, 17 September 2026).
At 3.75% against 2.50%, US dollar rates are about 1.25 percentage points higher. With HKD rates lower, hedging a US dollar asset back into HKD costs roughly that gap each year, while the entire band the peg allows is about 1.3%. Those two numbers side by side are the basic trade-off in hedging HKD/USD risk. Actual costs depend on tenor and bank quotes.
Who else is affected besides investors?
People paying in US dollars are barely affected. On daily rates, US$1,000 cost HK$7,784.4 on 5 January 2026 and HK$7,847.2 on 12 August, a difference of HK$62.8.
But because the HKD follows the US dollar, it moves against other currencies whenever the US dollar does. HK$10,000 bought about ¥195,269 on 12 February 2026 and about ¥208,925 on 29 July, roughly 7.0% more (calculated as a cross rate from Federal Reserve H.10 noon rates for HKD and JPY). Travellers to Japan and importers of Japanese goods feel the dollar–yen move, not the HKD–USD one.
Limits of these numbers
- Returns use monthly averages or New York noon rates, not the price of any actual trade.
- The S&P 500 and Nasdaq-100 are price indices without dividends. US dividend withholding, broker fees and FX spreads are not included.
- Every conclusion assumes the peg stays in place. This site does not forecast exchange rates and does not give investment advice.
Questions & answers
The Hong Kong dollar is pegged. Is there still currency risk in US stocks?
Yes, but very little. Under the Linked Exchange Rate System the HKD moves only between 7.75 and 7.85 per US dollar, a range of about 1.3%. Between August 2025 and August 2026 the monthly average moved 0.2%, and the S&P 500 returned 20.3% in USD and 20.6% in HKD. This assumes the peg stays in place.
Did the HKD trigger the 7.85 weak-side Convertibility Undertaking in 2026?
According to the HKMA reports published so far, the Convertibility Undertakings were not triggered from 30 December 2025 to 22 June 2026 and the Aggregate Balance stayed at about HK$54 billion. The Currency Board Account put the balance of the banking system at HK$54.1 billion at the end of July 2026. The weakest Federal Reserve H.10 New York noon rate in 2026 was 7.8472, on 12 and 14 August. The HKMA's operations report for the period after 22 June had not been published as of 29 September 2026.
Why can US stock returns be higher in HKD than in USD?
Because the HKD weakened slightly against the US dollar over the period. From December 2025 to August 2026 the monthly average went from 7.7808 to 7.8425, a 0.8% weakening, so the S&P 500 returned 12.5% in USD and 13.4% in HKD. The formula is (1 + USD return) × (1 + change in HKD per USD) − 1.
Should Hong Kong dollar investors hedge their US dollar exposure?
This site gives arithmetic, not investment advice. Hedging costs roughly the gap between US dollar and Hong Kong dollar short-term rates. After the 16 September 2026 hike the lower end of the federal funds target range was 3.75%, while the HKMA reported on 17 September that the average of overnight and one-month HIBOR was 2.50%, a gap of about 1.25 percentage points (rough calculation). The whole band the peg allows is about 1.3%.
Source
- CapsWindow · Data & methodology ↗
- FRED · Hong Kong dollars to one US dollar, monthly average (Federal Reserve H.10, EXHKUS) ↗
- FRED · Hong Kong dollars to one US dollar, New York noon buying rate (daily, DEXHKUS) ↗
- FRED · S&P 500 (SP500, daily close) ↗
- FRED · Nasdaq-100 (NASDAQ100, daily close) ↗
- HKMA · How does the LERS work? ↗
- HKMA · Milestones of monetary reform ↗
- HKMA · Currency Board Sub-Committee record, operations 21 June to 8 October 2025 (issued 28 November 2025) ↗
- HKMA · Currency Board Sub-Committee record, operations 30 December 2025 to 22 April 2026 (issued 15 June 2026) ↗
- HKMA · Currency Board Sub-Committee record, operations 23 April to 22 June 2026 (issued 7 August 2026) ↗
- HKMA · Exchange Fund Abridged Balance Sheet and Currency Board Account, end-July 2026 ↗
- HKMA · Analytical Accounts of the Exchange Fund, end-August 2026 ↗
- HKMA · Adjustment of Base Rate (17 September 2026) ↗
- US Treasury · Foreign Portfolio Holdings of U.S. Securities as of June 30, 2025 (Table A2) ↗