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Friday, July 29, 2016, 21:34

Bonds outperform in exchange fund income in 1H 2016

By Duan Ting

HONG KONG - The Hong Kong Monetary Authority (HKMA) announced on Friday that the Exchange Fund recorded an investment income of HK$40 billion in the first half of 2016, an increase of 48 percent on the same period last year, with HK$44.3 billion gains on bonds and HK$8.3 billion losses on equities.

According to the report, the Exchange Fund also gained HK$1.3 billion on other investments and HK$2.7 billion from the positive currency translation effect on non-Hong Kong dollar assets, but it lost HK$3.5 billion on Hong Kong equities and HK$4.8 billion on other equities.

Total assets of the Exchange Fund this year stood at HK$3.54 trillion at the end of June this year, an increase of HK$119.9 billion compared with the end of last year.

Compared with last year, the HKMA Exchange Fund recorded a total income of HK$27 billion, with HK$18.8 billion gains on Hong Kong equities and HK$20.5 billion on other equities, as well as only HK$4.5 billion gains on bonds and HK$8.3 billion on other investments.

According to Norman Chan, chief executive of the HKMA, the financial markets in the first half of the year were very volatile and there remain considerable uncertainties in the global financial markets, including the Brexit effects, the timing and pace of increases in the US federal funds rate, while the side-effects of the negative interest rate policies adopted in Europe and Japan may also gradually surface.

Chan expects that financial market volatilities will continue and the investment environment will become even more complex and difficult so that the HKMA will, as before, manage the Exchange Fund prudently and focus on the medium- and long-term performance. Hence the long-term investment objectives and strategy should not be distracted by short-term fluctuations in the markets.

tingduan@chinadailyhk.com

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