Hong Kong’s compulsory provident scheme makes positive start to year with 3.95 per cent return in January
- The Mandatory Provident Fund, which covers 2.8 million employees in the city, turned in a positive performance after losing 8.21pc in 2018
- Gains come on the back of strong rallies in US and Hong Kong stock markets
Hong Kong’s compulsory pension scheme turned its best performance in a year on the back of a strong stock market rally in the US and Hong Kong, generating an average return of 3.95 per cent in January, according to data from Lipper Refinitiv.
The Mandatory Provident Fund lost 8.21 per cent in 2018 – its worst year since 2011 after starting the previous January with gains of 4.4 per cent.
The MPF, which covers 2.8 million people in Hong Kong, had its second best year in 2017 with gains of 20.9 per cent, only next to 2009 with a return of 27.25 per cent.
“The Hang Seng Index rose by about 8 per cent in January and around 38 per cent of aggregate MPF assets are invested in Hong Kong equities. This was the major reason for the 3.9 per cent growth in the first month of the year,” said Kenrick Chung Kin-keung, chief commercial officer of financial services firm Charter Management Group.
Signs of a likely thaw in the US-China trade war and the US Federal Reserve hinting at a slower pace of interest rate rises boosted the US and Hong Kong stock markets.
The S&P 500 Index’s 7.9 per cent gain was its best January since 1987 when it rose 13.2 per cent.