Flat November puts brakes on MPF

25th November 2021

Record local equities underperformance poses MPF concern

Key points are as follows:

  • MPF collective investment losses are forecasted to total -$2bn in the month of November, an average loss of -$500 for MPF’s 4.5m members.
  • After factoring in expected losses and MPF contributions, total MPF assets are expected to end November at $1.197tr or approximately $263,500 for each MPF member.
  • Average investment return of MPF funds was 0.17% for month-to-date and 2.19% for YTD (See Table 1).
  • October’s positive investment gains for HK and China equities are expected to be short lived as local equities expect to produce a loss for November.
  • While local equities are expected to fall, US equities are forecasted to record an 8th month of relative outperformance compared to their HK and China counterparts and in doing so, generate a cumulative year-to-date relative outperformance of 31.56%, the widest 11 calendar month difference since MPF’s launch.

MPF Ratings, Hong Kong’s specialist independent MPF research group today announced it is expecting the MPF system to deliver a total monthly investment loss in November of -$2bn to its 4.5m members, the equivalent of -$500 loss per member. After factoring in MPF contributions, total assets at the end of November should reach $1.197tr or the equivalent of approximately $263,500 per member.

When announcing MPF Ratings’ forecasted MPF November returns Francis Chung (叢川普), MPF Ratings’ Chairman, observed that despite November’s expected modest loss the ongoing record outperformance of US equities relative to HK and China equities currently poses MPF’s greatest concern given the largest proportion of MPF member assets are invested directly in local equities.

Record Hong Kong/China and US equities return difference will impact MPF members

“Hong Kong and Mainland share market returns are critical to MPF’s success as a retirement wealth creation platform. With almost 25% market share local equities form MPF’s largest asset pool and this year they’re on track to underperform US equities by over 30%, a record difference since MPF’s inception. So while we continue to expect MPF will end 2021 in positive return territory for a 3rd consecutive year, due to the record relative underperformance of HK/China equities, we anticipate returns will likely only be in the low single digits.”

Table 1: MPF fund average investment returns by asset class (as of 22nd November 2021)

Source: MPF Ratings

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