6th June 2022
HISTORY SUGGESTS MARKETS ARE NEAR BOTTOM
MPF Ratings’ May MPF Performance Survey has now been uploaded.
Key points are as follows:
- A late May equity market rebound sees MPF record a return of 0.32% in May (as measured by the MPFR All Fund Performance Index) to modestly narrow MPF’s 2022 accumulated investment loss to approximately -$125.7bn or -10.25% (See Table 1).
- May’s positive result, equivalent to a monthly dollar gain of approximately $4.4bn, plus monthly contributions, sees average MPF member accounts increase by approximately $1,800 to $235,300.
- Total MPF assets at end of May remain above the psychologically important $1tr level and stands at approximately $1.079tr.
- After reporting losses for 6 consecutive months, HK and China equities was MPF’s best performing asset class, recording a 1-month gain of 1.74%. Conversely, US equities, the best performing asset class in 2021, is currently the worst performing asset class YTD.
- History suggests markets are near a bottom as MPF members are reminded that diversification and focusing on long term objectives rewards MPF members (See Chart 1).
MPF Ratings, Hong Kong’s specialist independent MPF research group, released its May MPF Performance Survey by reinforcing the importance of diversification and long term investing as the MPF system enjoyed its first positive investment return month following a late May equity market rebound.
In releasing MPF Ratings’ latest performance survey, its Chairman, Mr Francis Chung (叢川普) made the following observations:
History suggests we are near a market bottom
“MPF’s first monthly positive return in 2022 sees its year-to-date market loss narrow to -10.25%. Positively, MPF’s history shows that when losses exceed -10% it generally coincides with a market rebound and growth in MPF values.” (See Chart 1)
When will MPF recover its 2022 losses?
“It is important to emphasize the market losses accrued by MPF members in 2022 is not a result of the MPF system. Investment gains and losses are a function of financial markets. What the system is in control of however is the safeguarding of member assets and to this point the MPF system is highly robust and highly secure.”
MPF Ratings emphasizes long term investing, diversification and topping up MPF account balances at lower asset prices
“Time in markets, not market timing, is the key to unlocking long term wealth creation. Falling markets offers an opportunity to invest in quality assets at lower prices. Members should remain invested and diversified, maximizing the compounding effect that sees wealth grow exponentially over their working life.”
Table 1: 1-month and year-to-date MPFR Index returns as of 31 May 2022
Chart 1: Cumulative Performance of MPFR All Fund Performance Index since MPF inception and after losses exceeding -10%
Table 2: 10 best performing MPF constituent funds for the month of May 2022