24th February 2022
US market enters correction territory compounding 2022’s difficult start
Key points are as follows:
- MPF on track for losses exceeding -$35bn in February, taking 2022 year-to-date (YTD) losses to beyond -$70bn. The worst two month start during the pandemic period starting in 2020.
- On a per member basis, losses expected to be -$7,800 and -$15,600 per MPF’s 4.5m members in February and YTD respectively with total MPF assets expected to end February at $1.119tr (approximate account balance of $246,000 per MPF member), down from $1.151tr (or $253,000 per member at end of January).
- Average MPF fund investment returns are down -0.53% month-to-date and -3.23% year-to-date (See Table 1).
- MPF’s very weak performance attributed to last year’s best MPF performers, US equities, European equities, and Global equities (Also see Table 1).
- US equities enters correction territory, generating worst calendar year start (-10.31%) since the Global Financial Crisis in 2009 (-16.13%).
Francis Chung (叢川普), Chairman of MPF Ratings, Hong Kong’s specialist independent MPF research group today warned MPF members to brace themselves for ongoing losses resulting from Hong Kong’s escalating pandemic situation, and tensions over the Ukraine. MPF Ratings is forecasting an estimated loss of -$35bn loss in February bringing MPF’s accumulated 2022 loss to approximately -$70bn with US equities delivering its worst start to a calendar year since the Global Financial Crisis in 2009. Mr Chung also reaffirmed his view that 2022 is likely to remain extremely volatile pointing out investor concerns over global interest rates and inflation are now compounded by the confluence of Hong Kong’s pandemic escalation and the Europe’s most hostile situation since 1945.
Worst US equity losses since the Global Financial Crisis significantly hurts MPF members
“On the back of US equities’ worst calendar year start since 2009 and the Global Financial Crisis, MPF is on track to produce an estimated loss of -$35bn in February to take 2022 losses to -$70bn.”
2022 loss equivalent to almost one month’s salary for the average Hong Kong worker
“For the average MPF Hong Kong worker, this means a loss of approximately $15,600 to start the year. This is a significant loss, equivalent to almost one month’s salary for the average Hong Kong worker.”
Hong Kong’s escalating pandemic problem and the Ukraine situation are damaging confidence
“Hong Kong’s escalating pandemic problem and hostilities between Russia and NATO allies over the Ukraine are damaging the confidence of MPF members who already concerned over global interest rates and inflation. While volatility in the short term is likely to be both significant and ongoing, MPF members should not panic, rather they should remain invested, be well diversified, and focused on their long term retirement objectives.”
Table 1: MPF fund average investment returns by asset class (as of 21st February 2022)
Source: MPF Ratings