MPF posts biggest loss since October 2008
The Mandatory Provident Fund, which covers the pensions of more than two million Hong Kong employees, has reported its worst monthly performance since October 2008 after the European debt crisis sent global markets into a tailspin.
The 353 MPF investment funds reported on average a monthly loss of 5.17 per cent last month, according to Lipper, a member of Thomson Reuters.
Stock funds, which represent about 25 per cent of the HK$300 billion in MPF assets, lost 8.18 per cent and were the hardest-hit type of MPF fund. Those that invested in South Korean equities were the biggest losers, dropping 10.28 per cent. Mixed-asset funds, which represent half of the MPF assets and are invested in a mixture of bonds and stocks, reported a loss of 5.24 per cent.
According to Lipper, MPF returns last month were the fifth-worst since the scheme started in December 2000.
This also represented the worst monthly losses since October 2008, at the peak of the global financial crisis, when monthly losses reached 12.19 per cent, the worst on record.
The panic sell-off in the United States and Europe hit the Hong Kong stock market last month, sending the Hang Seng Index spiralling below 20,000 points. The index dropped 6.4 per cent last month, its worst-performing month this year.
RCM Asia Pacific chief executive Mark Konyn said last month proved to be the most difficult for investors as Greece's debt crisis and other financial problems in Europe threatened global contagion, although he remained optimistic about the outlook.
'We expect to see short-term improvements in markets once clear evidence emerges on a number of key issues related to the euro-zone debt crisis, the US economic recovery and the orderly correction in China's property market,' Konyn said.
Kenny Lee Yiu-sun, the chief executive of First China Securities, said stock markets worldwide fell last month as a result of the European debt crisis, hurting the MPF's investment performance.
'There are still a lot of uncertainties in financial markets because the European debt crisis is not yet over,' Lee said.
But he said MPF members should not change their investment portfolio because of short-term factors.
'If they keep changing their investment mix according to the ups and downs of the index, they may sell at the wrong time. Since the MPF is intended for retirement, they may be better off taking a long-term strategy, which would smooth over short-term market volatility,' Lee said.
Poor performance
According to Lipper, the average monthly loss reported by the city's 353 MPF investment funds in May was: 5.17%
