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Mandatory Provident Fund (MPF)
BusinessBanking & Finance

Hong Kong’s MPF lost each member US$1,387, as China regulatory storm, Evergrande debt saga pounded markets in third quarter

  • The MPF’s gains for the first nine months of this year now stand at a modest 0.3 per cent
  • Scheme members should not be too concerned about short-term market fluctuations, MPF authority says

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Hong Kong stock funds were the second worst performers among all MPF funds, losing 14 per cent in the third quarter and 8.8 per cent in the first nine months of this year, data shows. Photo: Winson Wong
Enoch Yiu
A rout in Hong Kong and mainland China stocks has hurt the performance of the city’s Mandatory Provident Fund (MPF), whose members lost about HK$10,800 (US$1,387) on average in the third quarter of this year.
The 400 or so MPF investment funds tracked by data provider Refinitiv Lipper lost 4 per cent on average in the three-month period, wiping out almost all of the 4.5 per cent gain recorded in the first half of 2021. The MPF’s gains for the first nine months of this year now stand at a modest 0.3 per cent.
It was also the compulsory pension scheme’s worst quarterly average performance since the first quarter of 2018, when MPF funds lost 6.5 per cent on average.
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“The MPF’s third-quarter performance was negatively affected by China Evergrande, Beijing’s crackdown on different industries in China and concerns about inflation globally. Moreover, the possibility of the US Federal Reserve tapering off quantitative easing and concerns about the US government’s debt ceiling have also added worries to the market,” said Kenrick Chung, general manager of employee benefits at Realife Insurance Brokers.

The MPF covers 4.5 million current workers and retirees in Hong Kong, who can choose where their monthly contributions are invested. The compulsory scheme’s performance has been affected by a 14.7 per cent slump in the city’s benchmark Hang Seng Index, as well as a 25 per cent drop in the Hang Seng Tech Index in the third quarter, because Hong Kong and China stock funds are popular among MPF members, who usually invest about third of their money in them.

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The market in Hong Kong has been hit by Beijing’s crackdown on technology and private education firms in July, and the more recent debt crisis at mainland Chinese developer China Evergrande Group.
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