MPF system produces surprise result as market uncertainties grow

14th March 2022

Latest inflow data shows strong support for MPF

MPF Ratings’ February MPF Asset Class Fund Flows Summary has now been uploaded.

Key points are as follows:

MPF recorded exceptionally strong net fund inflows in February; totalling $5bn (See table 1); the 3rd highest monthly net inflow since 2018.
February inflows were 17% higher than the historical average of $4.3bn.
MPF members continue to switch out of US and European Equities (Also see table 1).
Average account balances per 4.5m members continue falling, -$4,600 to $248,600. An -$11,500 decline for 2022, and the first time average account balances are below $250,000 since November 2020.
MPF’s total asset size are now $1.130tr (Also see Table 1), the lowest MPF asset level since November 2020.

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released MPF Ratings’ February MPF Asset Class Fund Flows Summary by highlighting the strong inflows into the MPF system despite the heightened global uncertainty.

Quotes:

On MPF’s strong February net inflows

“Despite the acute uncertainty affecting the world MPF attracted a record $5bn in net inflows in February.”

The reason for MPF’s strong net inflows

“The end of tax year is fast approaching and Tax Deductible Voluntary Contribution (TVC) accounts offer very attractive tax incentives to save for retirement. We attribute a significant portion of the strong February inflows to the topping up and opening up of TVC accounts.”

Immediate outlook for MPF

“We expect members will continue to switch from US and European equities into other asset classes. HK and China equities have been well supported within the MPF system but the Hong Kong equity market has performed poorly year to date and may see funds move as a result.”

Table 1: MPF Asset Class Fund Flows as at 28 February 2022