Debate centres on the fund's link with consumer sentiment Economists have mixed feelings about the impact a positive return of the Mandatory Provident Fund last year will have on consumer confidence. Standard Chartered economist Kelvin Lau Kin-heng is confident the fund's first profitable year in its three years of existence will have a positive effect on consumer sentiment. However, Hang Seng Bank chief economist Vincent Kwan said there was little connection between the performance of consumers' retirement funds and their willingness to spend. Boosted by a strong stock market, the MPF last year recorded a return of 19.21 per cent, figures from Standard & Poor's showed. Mr Lau said consumers were finally breathing a sigh of relief after watching years of MPF losses. 'Because of the poor performance since the MPF began in 2000, everybody has been saying it was like throwing money into the sea,' he said. 'For [the Hong Kong Investment Funds Association] to come out and say the funds are finally making money, it'll definitely help the economy.' Mr Lau compared the news to the Hong Kong Monetary Authority's announcement earlier of the $89.6 billion return made by the Exchange Fund last year. The government has received $25.7 billion of the profit earned, the third-highest amount since the fund was set up nearly 70 years ago. 'The effects are similar. They make people feel more financially secure without actually putting money in their pockets,' he said. But Mr Kwan is more cautious about the impact future income will have on consumer behaviour. 'We haven't done any research on the relationship between the two, but my estimate is that the effect will be minimal,' he said. 'The income gained from these investments can't be realised unless you reach the retirement age, which for most people is still quite a long way away.' He likened the MPF's performance to that of the stock market. 'They are both something that goes up and down many times throughout the year. You cannot predict for sure what you're going to get tomorrow,' he said. 'Instead of having any direct effect on consumer confidence, it can be seen as another indicator of how well the global economy is doing.' While Mr Lau believes the figures have brought a psychological boost to the economy, he said it was unlikely a strong return in retirement funds could trigger any significant economic activities.