Hong Kong’s Exchange Fund investment returns jump 125 per cent in third quarter as they track global stock market gains

The fund’s third quarter performance was mainly driven by earnings of HK$29.9 billion from foreign equities, 6.5 times higher compared to a year earlier

On a nine-month basis, the fund’s cumulative investment income totalled HK$62.4 billion, 61 per cent lower than the HK$161.4 billion a year earlier

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The Exchange Fund’s strong returns in the third quarter were mainly driven by HK$29.9 billion in earnings from foreign equities. Photo: Winson Wong

Published: 1:45pm, 2 Nov 2020Updated: 10:01pm, 2 Nov 2020

Hong Kong’s Exchange Fund, which is used to defend the local currency, reported a 125 per cent year on year increase in third-quarter income on the back of gains in overseas stock markets and bond investments.

Investment income stood at HK$52.8 billion (US$6.8 billion) in the July to September period, more than double the HK$23.5 billion a year earlier, according to a report submitted by the Hong Kong Monetary Authority to a Legislative Council panel on Monday.

The fund’s performance has fluctuated along with the fortunes of the global stock market amid the Covid-19 pandemic. The third-quarter returns however are lower than a gain of HK$121.6 billion reported during the April to June quarter but better than a loss of HK$112 billion in the January to March period.

“The markets still face a lot of uncertainties ahead including the US presidential election tomorrow and Brexit,” said Eddie Yue Wai-man, chief executive of HKMA who attended the Legco meeting.

Eddie Yue Wai-man, the chief executive of Hong Kong Monetary Authority, said on Monday that Hong Kong’s capital market and banking sector are solid. Photo: Xiaomei Chen

Yue, however, said that Hong Kong’s capital market and banking sector remain solid, referring to the massive capital inflow from investors chasing the many popular IPOs. He added that the HKMA had intervened in the market multiple times and sold almost HK$400 billion to weaken the Hong Kong currency because of the inflow.

Hong Kong and Shanghai are co-hosting Ant Group’s US$39.67 billion dual offering. The largest initial public offering in global financial history soaked up more than US$3 trillion from retail investors in both cities amid frenzied bidding for the financial giant’s shares.