MPF members bracing themselves for significant losses

28th September 2021

Concerns over China Evergrande Group issues impact MPF account holders

Key points are as follows:

  • Led by steep declines in HK and China equities and falls in all major asset classes in the month of September, the MPF system is expected to deliver a collective loss of approximately -$55bn for the September quarter.
  • A collective loss of -$55bn would be equivalent to an average investment loss of -$12,000 per member, the largest absolute dollar loss per member since the start of the global coronavirus pandemic.
  • As of 24 September, MPF funds recorded an average month-to-date investment loss of -1.76% (See Table 1), with all major asset classes reporting MTD losses.
  • HK and China Equity Fund is expecting to record a 4th consecutive month of losses for the first time in 3 years, with MTD, QTD and YTD losses of -5.34%, -15.03% and -9.93% respectively (Also see Table 1).
  • Factoring in the forecasted loss and MPF contributions, total MPF assets are expected to fall from $1.201tr as at end of August to $1.177tr while average MPF account balances are expected to shrink to $259,000.

Francis Chung (叢川普), Chairman of Hong Kong’s specialist independent MPF research group, MPF Ratings, today warned that MPF members should brace themselves for significant losses as a plethora of negative news from Mainland China continues to impact MPF returns.

MPF Ratings is forecasting that the MPF system will deliver a total loss of approximately -$55bn in the September quarter, the equivalent of an average investment loss of -$12,000per member and the largest quarterly loss since the start of the COVID pandemic; a loss which will see average MPF balances shrink to $259,000 for Hong Kong’s 4.5m MPF account holders.

Concerns over China Evergrande Group impact MPF returns

“Prior to the recent public concerns over the immediate future of China Evergrande Group investors were already spooked by Mainland regulatory interventions and domestic growth concerns. These concerns are now exacerbated with MPF’s Hong Kong and China equity funds on track to fall by another -5.34% in September, taking accumulated losses for the September quarter to approximately -15% and year to date losses to around -10%.”

Panicked MPF members need to look at the bigger picture

“While the September 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 September quarter loss of -$12,000is 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 24th September 2021)

Source: MPF Ratings

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