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Hong Kong’s MPF assets hit by worst investment loss in two years

MPF
By Hui Ching-hoo   
August 15, 2022

Hong Kong’s Mandatory Provident Fund (MPF) assets fell 4.17% in its last financial year with the 411 funds in the city’s largest retirement scheme reporting the worst investment loss since 2020 as global markets reeled from a confluence of factors, including China’s zero-Covid policy.

The MPF ended the 12 months to March 2022 with HK$1.12 trillion (US$143.95 billion) of total assets, down from HK$1.169 trillion in March 2021.

The 411 MPF funds had a combined investment loss of HK$97.76 billion or 8.2%, the steepest since an 8.6% loss in the financial year to March 2020, according to the Mandatory Provident Fund Schemes Authority’s (MPFA) annual report published on August 11. Last year, the funds posted a HK$250 billion or 28% gain.

Although the report does not give any reasons, the losses were incurred as global markets were battered this year by the war in Ukraine, US rate hikes to fight inflation, and China’s strict Covid-19 policy.

In Hong Kong, for example, the benchmark Hang Seng Index nosedived almost 24% during the MPF’s last financial year.

Nevertheless, the MPFA points out that the retirement scheme has managed to deliver an inflation-beating annualised net investment return of 3.6% since it was established in 2000, and that its accumulated net investments of HK$326 billion account for around 30% of MPF assets.

According to MPFA Chairman Ayesha Macpherson Lau, the MPFA has made “continuous” efforts to expand MPF investment universe.

She says the MPFA has also been working “full steam” to develop the centralised eMPF platform to ensure the launch is on schedule.

It aims to complete construction by the end of this year at the earliest. The 27 schemes under 13 trustees are expected to transition to the platform from early 2023. If all goes well, the platform is expected to become fully operational in early 2025.

The MPF had over 4.5 million members as of March 2022.