Hong Kong’s Mandatory Provident Fund assets edged up 0.1% to HK$1.185 trillion (US$152.3 billion) in the first four months of 2024, with inflation risk in the US and the crisis in Gaza prompting risk averse members to shift into bond funds, according to figures from local investment consulting firm GUM.
Last month, MPF members pulled HK$2.16 billion from equity funds and HK$870 million from mixed asset funds and put the money into fixed income funds, the first time this has happened thus far this year.
“Affected by the resurgence of US inflation and the geopolitical events in Gaza, the global stock market experienced an adjustment in April. The [MPF] market’s risk averse sentiment intensified,” Martin Wan, strategy and investment analyst at GUM, says in a statement on May 23.
Higher-than-expected US consumer prices in April raised concern that the Federal Reserve may need to wait longer to cut interest rates.
Wan believes withdrawals from equity funds will slow with Hong Kong’s stock market rebounding strongly this month.
He advised MPF members to take a long-term perspective instead of trying to “overly predict the best entry timing to chase market volatility”, pointing out that the MPF is a long-term retirement plan.
Meanwhile, Manulife Financial Corp, the largest MPF trustee, increased its market share by 0.12 percentage points to 27.8% in the first four months of the year. The Hongkong and Shanghai Banking Corporation, the second largest trustee, saw its market share edge up 0.07 percentage points to 17.6%.
