Hong Kong’s MPF earns HK$32.2 billion for its 4.7 million members in first half, reverses last year’s heavy losses
- MPF funds made an average gain of 3.07 per cent in the first half, a turnaround from the 12.8 per cent loss a year earlier
- US equity funds were the best performers, while China and Hong Kong equity funds suffered losses
The 413 investment funds under MPF earned a combined HK$32.2 billion (US$4.1 billion) in the six months to June, or HK$6,900 for each member, according to data provided by MPF Ratings, an independent research firm, on Wednesday.
The funds’ average return stood at 3.07 per cent for the six-month period, compared with a heavy loss of 12.8 per cent in the same period last year, which was the worst first half on record. The first-half returns were also the best since 2021 when the fund made 5.07 per cent.
US equity funds were the best performers, while China and Hong Kong equity funds suffered losses.
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China and Hong Kong equity funds, the MPF’s largest asset class, are facing headwinds, as China’s economic optimism has given way to concerns of slowing economic growth, he added.
The MPF’s strong first-half performance came as the global economy recovered from three years of the Covid-19 pandemic. The MPF reported a modest gain of 0.6 per cent in 2021, followed by a 15.7 per cent loss last year.
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“The main driving force [of the MPF’s result] was the strong performance of the markets in Europe, America and Japan,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International. “However, the Hong Kong stock market’s losses dragged down the MPF’s overall returns.”
US stock funds gained 15.9 per cent, followed by global equity funds at 13 per cent and European stock funds at 12.6 per cent, MPF Ratings data showed.
Default investment strategy funds, a popular choice that swaps investments between stocks and bonds according to the age of the employees, reported an increase of 9.1 per cent for funds with higher exposure to equities and 4.1 per cent for those more focused on bonds.
Hong Kong and China stock funds, the most popular investment options that represent 25 per cent of all MPF assets, were the worst performers, losing 4.6 per cent in the first half.
Hong Kong’s benchmark Hang Seng Index declined 4.4 per cent in the first half, while the CSI 300 index, which tracks the top 300 stocks in Shanghai and Shenzhen, lost 0.7 per cent.
Money market funds, which invest in the most liquid short-term instruments, lost 1 per cent. Mixed-asset funds that invest in both stocks and bonds added about 4 per cent.
The Mandatory Provident Fund Schemes Authority (MPFA), the pension regulator, urged the public not to worry about short-term fluctuations in the MPF’s returns.
“Scheme members are advised that the MPF is a long-term investment spanning over 40 years and with its robust design can withstand economic cycles and market fluctuations,” the authority said in a statement.
“The MPFA encourages scheme members to keep their MPF investment diversified as it can help reduce investment risk.”
After factoring in investment gains and contributions, the MPF’s total assets increased by HK$60.5 billion, or 5.4 per cent, to HK$1.11 trillion as of the end of June. On average, each MPF member has HK$236,800, which increased by HK$12,900 this year.
Established in December 2000, the MPF mandatorily requires both employer and employee to contribute 5 per cent of monthly salary, or up to HK$3,000 together per month, to invest in different MPF funds. The members can get back their contribution and investment returns at age 65.
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Ng expects the MPF to perform better in the second half as central banks globally start to pause raising interest rates.
“In addition, the Hong Kong and mainland stock markets may have the opportunity to catch up in the second half of the year due to the Chinese government’s stronger policy support to boost the economy,” Ng said.
Other analysts also expect China’s policies to be vital to the stock markets’ and MPF’s performance.
“There is a chance for the MPF’s performance to improve in the second half, if China injects stimulus into its economy and the pressure of rate hike lessens,” said Kenrick Chung, a director at Ben. Excellence Consultancy, an insurance broker in Hong Kong.
