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According to data, the 481 investment funds in the Mandatory Provident Fund have lost 9.43 per cent in the past three months. Photo: K.Y. Cheng

New | Hong Kong pension fund investments lose 5.61 per cent in worst month in three years

The Mandatory Provident Fund covering 2.5 million employees in Hong Kong lost 5.61 per cent in August, the worst monthly loss for retirement funds in three years, with all fund categories ending the month in the red.

With August's dismal showing, the 481 MPF investment funds have lost 9.43 per cent in the past three months, according to data company Lipper. Year to date, these pension funds have lost 3.77 per cent, compared with a gain of 1.5 per cent in the first eight months of last year, which in itself was the worst performance in three years at the time.

"The poor performance of the MPF in August was a result of the slump in Hong Kong and [China's] stock markets," said Joseph Tong Tang, executive director of Sun Hung Kai Financial.

The anticipated rate rise by the US Federal Reserve this month also hit bond prices in August, he added.

"Both the stock markets and the broader economy in China are unlikely to see a substantial bounce back for the rest of this year."

The August returns marked the worst since May 2012 for the MPF, which saw the constituent funds losing on average 6.03 per cent, at the peak of the euro-zone crisis.

China equity funds were the worst performers this time, losing 11.74 per cent in August and 27 per cent in the past three months. Hong Kong equity funds came a close second, losing 11.58 per cent in August and 21 per cent in the three months.

The mixed asset funds that invest in both bonds and equities, the most popular fund choice, suffered a loss of 6.18 per cent in August and 10.2 per cent for the three months.

Global bond funds also took a hit from the widely expected Fed rate rise, losing 0.73 per cent.

Money-market funds lost 0.25 per cent as the shock yuan devaluation last month pushed down other Asian currencies as well.

About 40 per cent of the HK$500 billion under the MPF is invested in mixed-asset funds, 39 per cent in equities and the rest in conservative funds, according to data from the Mandatory Provident Fund Schemes Authority.

This article appeared in the South China Morning Post print edition as: MPF loses 5.61pc in worst month in three years
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