Omicron variant wreaks havoc on MPF system

3rd December 2021

Wild November puts MPF on track for first annual loss since 2018

MPF Ratings’ November MPF Performance Survey has now been uploaded.

Key points are as follows:

  • MPF Ratings’ MPFR All Fund Performance Index fell -2.25% in November and -0.36% YTD (See Table 1) as all equity markets recorded losses in November.
  • MPF’s estimated November loss widened significantly from an estimated -$2.4bn on November 24, when detection of the Omicron variant was first announced, to an -$31.7bn at end of November, a 12X increases in losses and an equivalent average 1-month investment loss of -$7,000 per 4.5m MPF members.
  • The MPF system is now on track to lose -$14.8bn in 2021, an equivalent average investment loss of -$3,000 per member, and the first annual loss since 2018.
  • After factoring in forecasted losses and MPF contributions, total MPF asset size is expected to be $1.167tr at end of November, equivalent to a $257,000 average account balance (down from $263,000 in October).
  • HK & China Equity Funds was the worst performing in November and YTD, reporting a 1-month return of -5.95% and a YTD return of -12.82% respectively. The 4th month the asset class has produced the worst monthly performance in 2021.

Francis Chung (叢川普), Chairman of Hong Kong’s specialist independent MPF research group, MPF Ratings today released its November MPF Performance Survey by highlighting the impact that the COVID variant, Omicron, has had on MPF performance. 


On Omicron’s affect on MPF performance

“MPF was expected to deliver a modest monthly loss of only $500 per MPF member until Omicron’s first case was announced on November 24th. In the days that followed MPF’s total loss subsequently ballooned to approximately $31.7bn, or an average loss of $7,000 per MPF member, this is an extraordinary 12 fold loss in only one week and unfortunately puts MPF on track to deliver it’s first annual loss in 3 years.”

MPF’s financial vaccine

“While MPF members may appreciate that markets go up and down, what is overlooked is the magnitude of volatility, but MPF members can protect themselves from the unexpected by being well diversified and invest for the long term. You could say they’re MPF’s financial vaccines.”

Table 1: 1-month and year-to-date MPFR Index returns as of 30 November 2021

Source: MPF Ratings

Table 2: 10 best performing MPF constituent funds for the month of November 2021

Source: MPF Ratings

Table 3: 10 best performing MPF constituent funds for year-to-date of 2021

Source: MPF Ratings

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