MPF’s stocks funds returned 7 per cent average loss in August as Hong Kong’s market was buffeted by trade war and street rallies

The MPF’s Hong Kong equity funds returned 6.6 per cent in average losses last month, the worst performers out of all the pension fund’s asset-allocation options

Bonds outperformed all options, as investors sought refuge in fixed-income financial instruments amid a turbulent equities market

Reading Time:2 minutes

Pedestrians at a street crossing in Central, Hong Kong’s main business district. Photo: Fung Chang

Published: 3:55pm, 3 Sep 2019Updated: 11:01pm, 3 Sep 2019

Hong Kong employees who backed the city’s equities suffered their biggest losses last month when the city’s main pension fund was buffeted by the escalating US-China trade war and unprecedented civic unrest.

The 42 Hong Kong equity funds under the Mandatory Provident Fund (MPF), the compulsory pension fund with HK$910.09 billion (US$116.02 billion) in assets for 2.9 million of the city’s employees and self-employed, lost 6.6 per cent of their value on average in August, according to Lipper, a unit of the financial data provider Refinitiv.

The average loss in the Hong Kong stock funds, tracking a 7.4 per cent plunge in the key Hang Seng Index, was worse than the China fund’s 4.7 per cent drop, a 4.5 per cent decline in the Asia-Pacific excluding Japan fund, and bigger than the 2.9 per cent dip in the global equity fund, Lipper’s data showed.

The MPF’s most popular asset allocation option, chosen by 37 per cent of all employees, did worse than the 1.8 per cent decline seen across the pension fund’s 416 funds. Bond funds returned 1.9 per cent, as investors took shelter in fixed-income financial instruments amid declining interest rates and a turbulent equities market.

“Bonds provide a safe haven in times of volatile stock markets, due to the escalating trade war between the US and China,” said Elvin Yu, chief executive of pension consultancy Goji Consulting. “US equity funds are still in favour given the decent economic data in recent days. While some analysts are expressing concerns of a possible US recession, it won’t come any time soon.”

Hong Kong’s economy, on track to a technical recession in the third quarter as it’s been squeezed by a year-long trade war between the world’s two largest economies, has been put under further pressure as 13 weeks of street rallies since June have deterred visitors and investments in the city.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x