Hong Kong’s Exchange Fund reports record HK$86 billion loss in first quarter as coronavirus batters stock market
- The enormous losses mainly stemmed from the fund’s investments in both Hong Kong and overseas stocks
- The losses, mainly from overseas stock market investments, are in sharp contrast to a year ago when the fund reported its best first-quarter return, of HK$133.4 billion
Hong Kong’s Exchange Fund, the war chest used to defend the local currency from attacks by short sellers, lost HK$86.1 billion (US$11.1 billion) from investments in the first quarter as it fell victim to a worldwide stock market slump.
It is the biggest three-month loss the fund has suffered in the 16 years it has been reporting its quarterly performance.
The losses, which came mainly from overseas stock market investments, are in sharp contrast to a year ago when the fund reported its best first-quarter return, of HK$133.4 billion. It marks the first quaterly loss for the fund since the fourth quarter of 2018 when it lost HK$33.6 billion. This surpassed last record loss of HK$64.8 billion in the third quarter of 2015.
A strong return on both stocks and bonds last year had helped the Exchange Fund to report a record high gain of HK$262.2 billion, compared with only a modest increase of HK$10.9 billion in 2018 when it was hard hit by the US-China trade war. Last year’s performance surpassed the record HK$252 billion set in 2017.