HSI nosedive sends MPF into a tailspin

29th July 2021

MPF members brace themselves for significant losses

Key points are as follows:

  • MPF Ratings is expecting the MPF system to produce a significant loss for the month of July.
  • The MPF system is expected to deliver a collective loss of approximately -$38bn for July, an equivalent average investment loss of -$8,400 per member, the biggest loss in this calendar year.
  • Factoring in the forecasted loss, total MPF assets are expected to fall from an all-time record of $1.221tr to $1.187tr.
  • Factoring in MPF contributions, MPF average account balances are expected to decline from a record $268,866 to $261,000.
  • • A final week nosedive in the HSI in July, and its impact on HK/China equities, is biggest contributor to forecasted MPF losses (See Table 1).

Francis Chung (叢川普), Chairman of Hong Kong’s specialist independent MPF research group, MPF Ratings, today reported that MPF members should brace themselves for MPF’s largest loss this calendar year amidst a nosedive in the HSI, and concerns over China equities and Mainland regulatory policies.

MPF Ratings is forecasting that the MPF system will deliver a total loss of approximately -$38bn in July, the equivalent of an average investment loss of -$8,400 per member, and will see the average account balance for Hong Kong’s 4.5m workers fall to $261,000.

HSI nosedive sends MPF into a tailspin

“At its 27 July bottom, the HSI was on track to produce a loss of -12.98%. Irrespective of a rebound in HK Equities we expect July’s MPF loss to average out at -$8,400 per member which would be the biggest monthly MPF loss seen in 2021.”

Panicked MPF members need to look at the bigger picture

“While the July loss will be significant MPF members shouldn’t panic. Most recently MPF has seen 5 consecutive quarters of positive performance which has added an average of $65,000 worth of investment gains per MPF member, so while a forecasted July loss of -$8,400 is disappointing, the bigger and longer term picture continues to be positive for Hong Kong’s 4.5m workers.”

Table 1: MPF fund average investment returns by asset class (as at 27th July 2021)

Source: MPF Ratings

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