Exchange Fund reports fourth-worst result on foreign exchange losses and poor stock returns
The Exchange Fund reported poor earnings for last year, a gain of just HK$43.6 billion, as a result of foreign exchange losses and poor returns from Hong Kong and overseas stock investments.
The Exchange Fund reported its fourth-worst earnings result last year, a gain of just HK$43.6 billion, as a result of heavy foreign exchange losses and poor returns from Hong Kong and overseas stock investments, Monetary Authority chief executive Norman Chan Tak-lam said on Monday.
The HKMA manages the HK$3 trillion fund that is used to defend the local currency. It invests the fund, which includes the government’s fiscal reserves and other assets, in stocks, bonds, property and currencies.
The fund’s earnings last year were lower than the HK$75.9 billion in 2013 and HK$111.6 billion in 2012, but better than the HK$26.7 billion in 2011.
The investment environment in 2015 will be even more complex and difficult than 2014
Last year’s rate of return was only 1.4 per cent, compared with 2.7 per cent in 2013 and 4.4 per cent in 2012. The rate of return in 2011 was 1.1 per cent.
The fund’s worst result was a loss of 5.6 per cent in the aftermath of the global financial crisis of 2008, with the second-worst 2001’s dismal 0.7 per cent return.
Chan said investment sentiment had been hard hit last year by uncertainty in the foreign exchange and stock markets. Forex losses stood at HK$52.7 billion last year, compared with a HK$1.6 billion gain in 2013, with losses of HK$24.7 billion in the fourth quarter and HK$28.4 billion in the third on valuation losses on euro, yen and pound holdings against the US dollar.