8th February 2022
Volatility is expected to continue throughout 2022
MPF Ratings’ January MPF Performance Survey has now been uploaded.
Key points are as follows:
- MPF collective investment losses in January totalled -$35.1bn in January, an average loss of -$7,700 for MPF’s 4.5m members.
- After factoring losses and MPF contributions, total MPF assets are expected to end January at $1.151tr (approximate account balance of $253,000 per MPF member), down from $1.182tr (or $260,000 per member at end of 2021).
- Average investment return of MPF funds were down -2.73% in January (See Table 1). The worst start to a calendar year since 2016 (See Chart 1).
- Losses in January were driven by very weak performance from last year’s best MPF performers, US equities, European equities, and Global equities, but relatively good performance from last year’s worst performing asset class, MPF’s largest asset class, HK/China equities mitigated overall MPF losses (Also see Table 1).
- MPF expert expects volatile year driven by ongoing inflation and interest rate concerns.
MPF Ratings, Hong Kong’s specialist independent MPF research group today announced that the MPF system generated an average January loss of approximately -$7,700 for each of MPF’s 4.5m eligible members resulting largely from very weak US, European and Global equity performances. The loss was the first January loss since January 2020 and the worst since 2016. While the loss will be disappointing news, 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.
Expect markets to be volatile and interest rates to rise in 2022
“MPF has produced its worst start to a calendar year since January 2016. World markets continue to be a place of uncertainty. In addition to the ongoing pandemic, interest rates and inflation are now key risks. Where central banks globally were once committed to loose money policies, concerns now persist over high inflation and rising interest rates. Interest rates will rise. The questions are how high and how many rate increases. It’s those uncertainties that will create market volatility.”
Table 1: 1-month MPFR Index returns as of 31 January 2022
Chart 1: January’s average investment return of MPF funds from 2016 to 2022