Hong Kong Exchange Fund rebounds from record loss with US$14.22 billion return in first 9 months, as bonds beat stocks

The war chest that defends Hong Kong’s currency gained HK$110.9 billion in the first nine months, a turnaround from record losses last year

The fund reported an HK$5.5 billion loss in the July-to-September period, narrowing from a loss of HK$113 billion a year earlier

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The flag of the Hong Kong Special Administrative Region, right, flies alongside the flag of China outside the Exchange Square complex, which houses the Hong Kong Stock Exchange, on May 29, 2020. Photo: Bloomberg

Published: 9:56am, 17 Nov 2023Updated: 4:16pm, 17 Nov 2023

Hong Kong’s Exchange Fund reported a strong rebound in the first nine months of 2023, as a strong bond market helped narrow the third-quarter loss in the war chest that serves as the city’s currency defence.

The fund’s investments gained HK$110.9 billion (US$14.22 billion) in the nine months that ended on September 30, a strong turnaround from the record loss of HK$278.8 billion in the same period last year, the Hong Kong Monetary Authority (HKMA) revealed at a Legislative Council meeting on Friday.

The fund reported a HK$5.5 billion loss in the July-to-September period, narrowing from a loss of HK$113 billion a year earlier, which was the third-biggest quarterly loss on record.

The third-quarter loss is the first quarterly loss since the third quarter last year. The fund gained HK$108 billion in the first three months of the year and HK$8.4 billion in the second quarter.

“The Exchange Fund is for a long-term investment and should not worry over the short-term market volatilities,” Eddie Yue Wai-man, CEO of the HKMA, said during the financial affairs panel meeting at the Legislative Council.

“If the markets maintain the current trend, I am still expecting the fourth quarter and the full year investment return of the Exchange Fund to be positive.” Yue said.

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