Exchange Fund, Hong Kong’s currency-peg defender, reports first-half gain of US$14 billion as global stock, bond markets rebound

It marks a turnaround from a record loss of HK$165.4 billion in the year-ago period

‘We are not overly optimistic about the investment outlook for the rest of the year,’ warns Eddie Yue Wai-man, CEO of the HKMA

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The first-half result was a turnaround from a record loss of HK$165.4 billion in the same period a year ago. Photo: Bloomberg

Published: 5:26pm, 25 Jul 2023Updated: 5:39pm, 25 Jul 2023

Hong Kong’s Exchange Fund, the war chest used to defend the local currency, posted a return of HK$110 billion (US$14.08 billion) in the first half of this year on the back of rising overseas stock and bond markets globally.

The first-half result was a turnaround from a record loss of HK$165.4 billion in the same period a year ago, according to data provided by the Hong Kong Monetary Authority on Tuesday.

The strong gain marks a continuation of a recovery in the Exchange Fund’s performance following a return of HK$73.4 billion in the final three months of 2022. However, it falls short of the HK$139.7 billion gain in the first half of 2021

The fund’s second-quarter return of HK$2 billion was a mere fraction of the HK$108 billion generated between January and March. The total value of assets decreased by HK$24.1 billion to HK$3.983 trillion over the last six months.

Hong Kong Monetary Authority CEO Eddie Yue. Photo: Xiaomei Chen

“Investor sentiment has turned positive as the market generally anticipated a slower pace of US rate hikes, coupled with economic data indicating resilience in the US economy,” said Eddie Yue Wai-man, CEO of the Hong Kong Monetary Authority, in a statement.