HKD or AUD pay - which would you choose?

Closed Thread
Page 1 of 2 1 2 LastLast
  1. #1

    Join Date
    Sep 2008
    Posts
    12

    HKD or AUD pay - which would you choose?

    Hi all,

    I've been trawling this forum for awhile now and have a question.

    Ive recently moved to HK and am in the process of finalising my pay. When I was negotiating, the AUDHKD was at 7.4 and now it is at 6.4. The pay was negotiated in AUD (ouch!)

    I have a mortgage to pay off in Australia and have rented the place out. But there is still a monthly shortfall. And I also have an offset acct with interest rate ~9% atm.

    My employer has kindly offered two choices -

    Use 7.4 rate and then get the HKD amount paid to HK bank account. ( if you think AUD can't get any better this would be the pick I guess)

    Stay with AUD amount, get paid in AUD to AU bank account. ( if you think AUD will get better )

    So the factors that are affecting my decision are-
    - where is AUD vs HKD going in the next 2 years? if you don't take a view on where this is going, what would you do?
    - mortgage offset acct 9% so obviously leave as much money as possible in there.
    - transferring money either AUD -> HKD or HKD ->AUD all the time.

    just wanted some opinion on this.


    thx!!
    ken


  2. #2

    Join Date
    Feb 2007
    Location
    Victoria
    Posts
    460

    how long do you intend to stay at this job? are you on a fixed term contract?

    if your HK expediture is greater, take HKD or vice versa.

    if you want to take a gamble, choose the other.

    maybe you should think about how your taxes
    you know you can get paid in AUD into a HK account


  3. #3

    Join Date
    Jun 2008
    Location
    Kowloon
    Posts
    1,184

    HKD will get a lot stronger over the next 3-4 quarters before it gets weaker, other Asia currencies (ex-japan) should weaken. Kinda depends on your timescales.

    Quote Originally Posted by khoong25:
    Hi all,

    I've been trawling this forum for awhile now and have a question.

    Ive recently moved to HK and am in the process of finalising my pay. When I was negotiating, the AUDHKD was at 7.4 and now it is at 6.4. The pay was negotiated in AUD (ouch!)

    I have a mortgage to pay off in Australia and have rented the place out. But there is still a monthly shortfall. And I also have an offset acct with interest rate ~9% atm.

    My employer has kindly offered two choices -

    Use 7.4 rate and then get the HKD amount paid to HK bank account. ( if you think AUD can't get any better this would be the pick I guess)

    Stay with AUD amount, get paid in AUD to AU bank account. ( if you think AUD will get better )

    So the factors that are affecting my decision are-
    - where is AUD vs HKD going in the next 2 years? if you don't take a view on where this is going, what would you do?
    - mortgage offset acct 9% so obviously leave as much money as possible in there.
    - transferring money either AUD -> HKD or HKD ->AUD all the time.

    just wanted some opinion on this.


    thx!!
    ken

  4. #4

    Join Date
    Oct 2005
    Location
    Sham Tseng, NT
    Posts
    452

    Since your question is quite important, i'll only answer the part I know and am familiar with. See attachement for a currency evolution between USD and AUD.

    Recently the USD is going up because

    1. most bad news about the US economy is currently priced in the currency appreciation ( doesn't mean that USD economy has hit bottom. More bad news might still come.)

    2. There isn't place left for more rate cuts and with the high inflation in mind (and recent rhetoric of Bernanke) the fed might start raise rates in the near future (i doubt it they have room for this but this point of view is also being priced in my traders and it pushes the usd up)

    3. Global economic slowdown is becoming more and more a fact. It is not only USA now. UK is at a brink of recession. EU's business sentiment is at a all time low (although the profit figures released last week were better then expected). Japan same deal. and even China is facing a weakened demand (still very much export oriented). As a result the global need for oil is assumed (!) to weaken which explains the fall oil prices these past few weeks. Oil prices and USD are strongly linked.

    This explains the rise of the USD compared to other currencies somewhat and there is no reason to immediately suspect that the trend will reverse or has even peaked.

    But the biggest gains should be realized by now. More appreciation of usd is underway though so i would suspect that USD versus your currency will grow even a bit further. But that also depends on how the Australian economy is doing! Am not following your economy to much so I shouldn't comment on that part.

    Currency forecasting is one of the most difficult things to do and it can change pretty fast as the economy is changing. It's a very volatile currency year ...

    But as last time I was betting against usd, this time i'm betting for it. Sentiment is quite bullish now...


    Edit : I'm talking about USD and not HKD since they are pegged and the rise of the HKD finds it's origin in the USD and it's economy. So for your case, it's basically the same

    Last edited by FilipH; 03-09-2008 at 11:38 AM.

  5. #5

    Join Date
    Jun 2008
    Location
    Kowloon
    Posts
    1,184
    Quote Originally Posted by FilipH:
    But that also depends on how the Australian economy is doing! Am not following your economy to much so I shouldn't comment on that part.
    Oz relies heavily on comodities, where prices should soften in the coming quarters if the global economy continues to slow

  6. #6

    Join Date
    Sep 2008
    Posts
    12
    Quote Originally Posted by lulumay:
    how long do you intend to stay at this job? are you on a fixed term contract?

    if your HK expediture is greater, take HKD or vice versa.

    if you want to take a gamble, choose the other.

    maybe you should think about how your taxes
    you know you can get paid in AUD into a HK account
    time frame is unsure, should be at least 2 years before we decide to go anywhere else. There's no real terms /conditions to the contract.

    I guess HK expenditure is way greater, since the AUD shortfall yearly is about ~22k AUD.

    taxes? Can you please elaborate further? I will be paying HK tax, and not AU tax. unless you have a way for me not to pay any tax?

  7. #7

    Join Date
    Oct 2005
    Location
    Sham Tseng, NT
    Posts
    452

    In attachment you see
    your currency versus the USD and
    your currency VS the HKD.

    They clearly run an identical path.

    So to answer your question you should really think about your currency versus the US economy (with the global slowdown in mind). Are they cutting rates or not in the foreseeable future?


  8. #8

    Join Date
    Sep 2008
    Posts
    12

    thx FilipH..

    i think the commodities story is over for now and the Oz economy is slowing. I don't think the AUD will hit such a high again in the next few years so I think Im heading towards taking the HKD and punt on AUD not rising that fast or much.


  9. #9

    Join Date
    Feb 2007
    Location
    Victoria
    Posts
    460
    Quote Originally Posted by khoong25:
    time frame is unsure, should be at least 2 years before we decide to go anywhere else. There's no real terms /conditions to the contract.

    I guess HK expenditure is way greater, since the AUD shortfall yearly is about ~22k AUD.

    taxes? Can you please elaborate further? I will be paying HK tax, and not AU tax. unless you have a way for me not to pay any tax?
    i think you have answered your own question.

    i'm no tax specialist. first thing that came to my mind you'll be taxed by the ATO for the interest or whatever profit generated from the money.

  10. #10

    Join Date
    Mar 2007
    Location
    Gold Coast Marina
    Posts
    17,934

    I have a similar exposure to NZD (still have a rented property in NZ) and also a desire for AUD in the future (as I am Australian and expect to retire there). Right now I am converting out of NZD and AUD and into USD for the foreseeable future. I got paid in USD when I moved here last year and it really hurt for a while when the USD/HKD depreciated against the AUD/NZD, but I think the tide has turned. I would opt for USD if I were you.

    Left field option though - can you split? Ask for 22k to be paid in AUD and the rest in USD/HKD? That manages your liability and the rest is where you live which is about right.


Closed Thread
Page 1 of 2 1 2 LastLast