HKMA will stay the course on ESG investments as returns improve over past two years, CEO Eddie Yue says

HKMA’s ESG portfolio has outperformed its traditional investments over the past two years, CEO Eddie Yue Wai-man says

HKMA only started investing in ESG stocks two years ago while it has been investing in green bonds for the past six years

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The Hong Kong Monetary Authority will continue to support green bonds and other ESG investments, chief executive Eddie Yue said on Friday. Photo: SCMP

Published: 10:00am, 5 Jun 2021Updated: 10:02am, 5 Jun 2021

The Hong Kong Monetary Authority, which is responsible for investing the city’s financial reserves, will place more of its funds in stocks and bonds that adhere to environment, social and governance (ESG) concepts to achieve better returns, chief executive Eddie Yue Wai-man said.

The HK$4.54 trillion (US$585.8 billion) Exchange Fund, the war chest used to defend the local currency from attacks by short-sellers, earned HK$11.6 billion from its investments in the first quarter. The volatile markets saw the fund’s earnings fall to HK$235.8 billion last year after posting a record HK$262.2 billion in 2019.

The strong performance was partly due to the de facto central bank’s commitment to ESG investment.

“Our ESG investment portfolio has outperformed the traditional investment portfolio over the past two years,” Yue told a panel discussion of the Green Swan 2021 conference on Friday, the last day of the three-day virtual conference.

Eddie Yue Wai-man, chief executive of Hong Kong Monetary Authority. Photo: Winson Wong

The online event, co-sponsored by the Bank for International Settlements, the Banque de France, the IMF and the Network for Greening and Financial System, gave political and business leaders a platform to discuss ways to address the climate crisis.

Yue said the global markets over the past two years have been volatile because of the Covid-19 pandemic and the US-China trade dispute. “Under such special market situations, the companies that comply with good governance standards can outperform the others,” Yue told the online conference where he was joined by central bankers of Singapore, Japan and Malaysia.