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Wednesday, August 3, 2016, 16:39

MPF rebounds amid aggressive global QE

By Lin Wenjie
MPF rebounds amid aggressive global QE
The MPFA booklet "Getting Information about Your MPF" will help scheme members get a better grasp of various types of MPF information. (Provided to China Daily)

HONG KONG — Hong Kong’s Mandatory Provident Fund (MPF) rebounded in July, as global stock markets staged a turnaround in the expectation that central banks of all countries will continue to maintain the current aggressive quantitative easing (QE) monetary policies.

The Convoy MPF Composite Index increased for the first time this year by 5.92 percent to 192.92 on July 27 compared to the previous month, according to the latest data released by Convoy Investment Research Department.

The Equity Index rose 9.08 percent to 191.86, while the Bond Index increased 0.05 percent to 155.41. Benefiting from the turnaround of the equity market, each MPF policyholder recorded an average gain of HK$3,280 year-to-date.

"The positive statistics in July reflected market expectation for continued implementation of aggressive quantitative easing policies by the central banks of all countries and the positive investment sentiments, when the effects of Brexit are not yet fully evident,” said Kenrick Chung, Director of MPF Business Development of Convoy Financial Services.

But he also warned that although the US Federal Reserve delayed hiking interest rates and Japan would launch measures to boost its economy next week, the market is expected to remain volatile this year as the coming US election may impact the global market, and the forthcoming interim results of corporations are expected to be only fair, which may drag down the overall market performance.

Convoy Investment Research Department also pointed out that though capital has recently flowed to high-risk assets, no significant improvement in the global economy is evident.

"MPF scheme members with higher risk tolerance are advised to consider investing in Asian equity funds (excluding Japan); members with low risk tolerance and close to retirement age should consider investing in guarantee funds,” Chung added.

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