The government's Exchange Fund has posted disappointing returns for the first half of the year, raising concerns that its annual revenue targets may prove unrealistic.
Investment income from the fund contributed just $2.4 billion to the Treasury during the period, well short of the full-year target of $12.25 billion.
Forex losses and sluggish equity markets resulted in an 80 per cent year-on-year drop in total investment income to $9.6 billion in the past six months, down from $47.8 billion last year.
The government places its accumulated fiscal reserves with the Exchange Fund, controlled by the Hong Kong Monetary Authority, which invests in stocks, bonds and foreign currencies. Profits are shared with the general Treasury.
HKMA chief executive Joseph Yam Chi-kwong said the worst losses were posted in April, eroding all $16.8 billion the fund had earned in the first quarter. The fund accrued its $9.6 billion interim profit during the global stock market recovery in May and June.
'After a promising first quarter, financial markets fell on heightened concerns over inflation,' Mr Yam said. 'High oil prices and geopolitical tensions gave rise to very volatile bond, equity and currency markets.'
