Hong Kong: Exchange Fund’s 9-month loss balloons to a record US$34 billion from ‘triple whammy’ of plunging stocks, bonds and currency
- HKMA chief Eddie Yue expects the Exchange Fund to report a full-year for 2022, the third such time in the fund’s history
- The fund’s cumulative losses totalled HK$265.5 billion over nine months, the worst nine-month loss on record
The Exchange Fund, the war chest used to defend the Hong Kong dollar from attacks by short-sellers, lost a record HK$265.5 billion (US$34 billion) from investments in the first nine months as it fell victim to a “triple whammy” of falling valuations for equities, bonds and currency holdings.
Global markets have been falling in the wake of the Covid-19 pandemic, which has caused global supply chain disruption for many industries. Russia’s invasion of Ukraine also set off an inflationary spiral for many countries, with the prices of food and energy spiking higher, leading to higher interest rates. Meanwhile, China’s economy has slowed amid macroeconomic headwinds and a slumping property market.
The fund lost HK$100.1 billion during the three months that ended in September, making it the second-biggest quarterly loss in the 19 years since it began reporting quarterly earnings. The record was HK$112 billion in the first three months of 2020 during the onset of Covid-19 pandemic.