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MPF back on track after rebound

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The stock market rally at the start of this year helped the city's pension fund turn around in January to record one of its best months after a disastrous year.

The 429 funds registered in the Mandatory Provident Fund gained on average 4.9 per cent in January, according to data provider Lipper.

The MPF, which stood at HK$336.9 billion at the end of September, and covers 2.5 million employees, owes much of its recovery to the rally in stock and bond markets. The Hang Seng Index rose almost 2,000 points, or 10.6 per cent, last month alone, making it the best January for the local market since 1996.

Louis Tse Ming-kwong, director of VC Brokerage, said the market rally was prompted by stonger US economic figures and the united efforts of the European leaders to surmount the sovereign debt crisis.

'Investment sentiment worldwide has improved but whether this will continue for long will depend on the corporate earnings results that will be announced in the following weeks,' Tse said.

January's strong MPF performance, however, still could not erase the losses incurred last year, when the funds on average lost 8.41 per cent. Last year was the second-worst performance since the launch of the scheme in 2000 - during the global financial crisis in 2008, MPF funds plunged by an average of 26 per cent.

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