Hong Kong’s Exchange Fund to report ‘significant’ first-half loss as ‘perfect storm’ sends all assets into free fall, HKMA chief warns

The war chest to defend the local currency is likely to report a big loss as all asset classes took a nosedive, says Eddie Yue

The HKMA, which manages the HK$4.6 trillion (US$586.14 billion) fund, is expected to announce the results later this week

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The HKMA, which manages the HK$4.6 trillion (US$586.14 billion) Exchange Fund, is expected to announce the investment results later this week. Photo: Shutterstock

Published: 8:30pm, 26 Jul 2022

The Exchange Fund, Hong Kong’s war chest to defend the local currency, is expected to report “a significant loss” for the first half of 2022, according to a profit warning issued on Tuesday.

“In the first half of this year, prices nosedived across almost all types of asset, leaving investors with no real options for taking shelter,” said Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue Wai-man in a statement posted on the de facto central bank’s website.

“Caught in this perfect storm, the Exchange Fund, as with other investors, could not stay totally unscathed. We expect quite a significant loss in the first half of the year.”

The HKMA, which manages the HK$4.6 trillion (US$586.14 billion) Exchange Fund, is expected to announce the investment results later this week.

Back in April, Yue also issued a profit warning for the Exchange Fund’s first-quarter results, predicting that the fund would face a “triple-whammy” of equity, bond and foreign exchange valuations falling at the same time if the US were to speed up its interest-rate increases.

The fund lost HK$55 billion from investments in the first quarter, its third-biggest loss in the 18 years since it began reporting its quarterly performance.

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