27th January 2022
Year of the Tiger expected to be highly volatile but members urged not to panic
Key points are as follows:
- MPF collective investment losses are on track for a total loss -$28.3bn in January, an average loss of -$6,200 for MPF’s 4.5m members.
- After factoring in the expected losses and MPF contributions, total MPF assets are expected to end January at $1.157tr (approximate account balance of $255,000 per MPF member), down from $1.182tr (or $260,000 per member at end of 2021).
- Average investment return of MPF funds are down -1.84% month-to-date (See Table 1), putting MPF on track for the worst January start since 2020.
- Losses in January were driven by very weak performance from last year’s best MPF performers, US equities, European equities, and Global equities (Also see Table 1).
- Members urged not to panic. Positively, despite a weak start, 2020’s annual average investment return was 12.31%.
MPF Ratings, Hong Kong’s specialist independent MPF research group today announced that it expects the MPF system to start the Year of the Tiger with an expected average loss of approximately -$6,200 for each of MPF’s 4.5m eligible members resulting largely from very weak US, European and Global equity performances. While the loss is very disappointing news for MPF members, Francis Chung (叢川普), MPF Ratings’ Chairman, urged MPF members not to panic but he also cautioned that 2022 is likely to be a volatile year for equities.
Worst start to the year since 2020
“MPF is on track to produce its worst calendar year start since January 2020 but MPF members can take a positive lesson from that period when, despite a steep decline in markets and a year of uncertainty, the MPF system ended the year up 12.31%. The key lesson from 2020 was to remain invested and be well diversified.”
Why equity markets may be highly volatile in 2022
“Like January 2020, January 2022 sees the world entering a period of uncertainty, however whereas 2020 was pandemic driven, 2022 is inflation driven, and where central banks globally were once universally committed loose money policies, concerns now persist high inflation. Interest rates will rise in 2022. The questions are how high and how many rate increases will there be, and it’s those uncertainties that will create market volatility.
Table 1: MPF fund average investment returns by asset class (as of 24th January 2022)
Source: MPF Ratings