24th March 2022
Members to see their MPF accounts shrink by $16,000
Key points are as follows:
- MPF on track for a 3rd consecutive monthly loss with March losses currently exceeding -$12.7bn, taking 2022 first quarter losses to beyond -$74bn. The worst three month start since the first quarter of 2020.
- On a per member basis, average losses expected to exceed -$2,700 in March and -$16,100 for Q1 2022 per MPF’s 4.6m members while total MPF assets are expected to end March at $1.121tr (approximate account balance of $244,400 per MPF member), down -5.16% from $1.182tr at end of 2021 (or $257,700 per member).
- Average MPF fund investment returns are down -2.52% month-to-date and -7.09% YTD, the worst calendar year start since the first quarter of 2020 (See Table 1).
- HK and China equities is set to be the worst performing asset class for March and YTD, and will report investment losses for a 3rd consecutive quarter.
Hong Kong’s specialist independent MPF research group, MPF Ratings, is forecasting an estimated loss of -$12.7bn loss in March will bring MPF’s accumulated 2022 loss to approximately -$74bn with Francis Chung (叢川普), MPF Ratings’ Chairman, pinpointing poor Hong Kong and China equity performance as the biggest contributor to Hong Kong’s retirement system’s ongoing losses.
Ongoing losses in Hong Kong and China equities significantly hurts MPF members
“Hong Kong and China equities is on track to produce not only its 3rd consecutive quarterly loss but also the worst performance of all MPF asset classes in both March and in the first quarter of 2022. As MPF’s biggest asset classes this will hurt many MPF members.”
A 2022’s first quarter loss of -$74bn is equivalent to losing 1 month’s salary
“Three consecutive months of losses totaling an estimated -$74bn is a significant loss. It is equivalent to approximately a loss of -$16,100 per MPF member, roughly one month’s average salary for a Hong Kong worker.”
Ongoing issues will continue to undermine MPF member confidence but remaining diversified and invested is vital
“Ongoing global and domestic issues will continue to undermine MPF member confidence. Hong Kong and China’s current pandemic problems, war in the Ukraine, and rising global inflation and interest rates have all contributed to market volatility. These will not immediately disappear so MPF members should expect high levels of volatility to continue. Market timing is difficult especially in unpredictable markets. 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 March 2022)
Source: MPF Ratings