Investment of assets in Hong Kong's Exchange Fund earned $47 billion last year, more than six times the amount in 2001. The windfall allowed a higher-than-expected payout to the government which is seeking to plug the budget deficit. Hong Kong Monetary Authority (HKMA) chief executive Joseph Yam Chi-kwong said the government would receive $15.7 billion from the earnings, $1.9 billion more than it had accounted for in last year's Budget, and more than eight times the amount received in 2001, when the Exchange Fund earned $7.4 billion. 'By bringing a better-than-expected return to the government reserves, the HKMA has fulfilled its duty to help the government solve the budget deficit problem, which may reach $70 billion this financial year,' Mr Yam said. Exchange Fund assets include the $301.7 billion in government reserves. The HKMA is responsible for investing the total $955.1 billion in assets in the fund in global bonds, stocks in Hong Kong, the US and Europe, and in foreign currencies. The fund enjoyed a 5.1 per cent return on its investments last year, compared with 0.7 per cent in 2001. 'The return is higher than the current inflation rate and is better than private sector funds,' Mr Yam said. Bonds were the major profit contributor last year, with the fund earning $54.3 billion from its bond holdings, up from $50.8 billion from 12 months previously. Turnaround in the foreign currencies market earned a profit of $27.3 billion last year, compared with a loss of $13 billion in 2001. Stocks performed worst, suffering a loss of $22.8 billion overseas and $11.8 billion in Hong Kong. It was the second consecutive year where huge stock losses had been experienced. However, Mr Yam said the Exchange Fund had increased its investment in US and European stock markets in the middle of last year and reduced some bond investment. He said because the stock markets had been drifting down for the past three years, he thought they could bounce back. Bond prices, on the other hand, had risen substantially last year and the chance of further gains this year may be reduced. 'This is why we decide to shift some bond investment into overseas stocks.'