MPF funds drop 2.62pc as jitters hit the markets
Widening losses over past two months eat into solid gains from earlier in the year
The 481 investment funds in the Mandatory Provident Fund scheme extended their losses last month, recording an average decline of 2.62 per cent, with most stocks and bonds funds remaining in the red, according to data company Lipper.
The loss in June widened from May's 0.79 per cent decline, with combined losses over the two months eating into gains in the first four months.
For the first half of the year the average fund gained 3.80 per cent, less than the 11.7 per cent gain in the Hang Seng Index but beating the average fund return of 1.5 per cent for the whole of last year.
"A dramatic reversal in China, with knock-on effects in Hong Kong, combined with greater risk aversion relating to events in Europe caused markets to sell off in June," said Mark Konyn, chief executive of Cathay Conning Asset Management. "As a result MPF funds recorded a negative month in the context of a healthy first half of the year performance.
"The critical question is whether the first-half gains can be maintained amid growing concerns over a Greek exit from the euro and continued stress in the mainland equity market."
Mainland equity funds were the worst performers in June, losing 7.45 per cent on top of a 2.33 per cent loss in May. The Shanghai and Shenzhen stock markets have both fallen more than 20 per cent since June 12, entering bear market territory.