Exchange Fund looks to yuan, emerging markets
After bumper year thanks to strong second half here and overseas, fund to invest more in shares and bonds in China and developing economies
The city's Exchange Fund, which had its second-best investment gain on record in 2012, will invest more in yuan-denominated bonds and shares this year.
The Hong Kong Monetary Authority (HKMA) uses the fund, which has HK$2.782 trillion in assets, to ensure the stability of the Hong Kong dollar. The fund reported investment earnings of HK$108.6 billion last year, the best year since the HK$142.2 billion made in 2007. Last year's return is almost four times the HK$27.1 billion it earned in 2011.
HKMA chief executive Norman Chan Tak-lam said the fund's performance was due to strong Hong Kong and overseas stock markets in the second half.
But he warned of tough times ahead, and said the fund would put more money into yuan and other emerging markets' shares and bonds to achieve a better return. The fund's yuan and emerging markets investments made an 8 per cent return last year, higher than the 4.4 per cent from investments in advanced markets' bonds and shares.
"I expect global financial markets will continue to be subject to many uncertainties in 2013," Chan said yesterday.
"Although Europe has earned some respite from its debt crisis, the outlook for the real economy and jobs situation in the euro zone does not provide any grounds for optimism. As for the US, the momentum for growth remains lacklustre."