25th August 2022
Macro uncertainties stall MPF recovery
Key points are as follows:
- August’s estimated MPF investment loss at the time of writing is -$20.5bn (or -$4,500 per MPF’s 4.59m MPF members). Year-to-date losses, are estimated to be approximately -$174.3bn, or -$38,000 per MPF member.
- After factoring in MPF contributions, August’s average MPF member account balance is expected to be approximately $227,900, a decrease of $3,600 over the month.
- Assuming markets remain steady in August’s final week, total MPF assets are expected to end the month at approximately $1.045tr, a decrease of $16.5bn from the previous month.
- Concerns over global inflation, interest rates and recession continue to be the biggest market risks.
- Euro trades at 20-year low highlighting the need for diversification.
MPF Ratings, Hong Kong’s specialist independent MPF research group, is expecting the MPF system to record a 7th month of losses in 2022, but according to MPF Ratings’ Chairman, Francis Chung (叢川普), inflation, interest rates and recession concerns remain the biggest risks to markets as the Euro trades at a 20-year low.
Macro factors continue to impact markets
“Inflation, interest rates and recession concerns continue to persist. These macro uncertainties are reflected in the volatility which continue to impact markets.”
“July saw HK/China and US equities record an unprecedented 16.51% monthly return difference. August sees the Euro currency trading at a 20-year low. Both are extreme but these extremes serve to reinforce the importance of investment diversification.”
What should MPF member do?
“Volatile markets create unexpected outcomes. To mitigate the downside of such unexpected outcomes it is imperative that MPF members remain invested and well diversified. Every MPF scheme offers Default Investment Strategy (DIS) funds. They’re low fee ready-made diversified fund options. For the vast number of MPF members DIS is an excellent option to consider.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 22nd August 2022)
Source: MPF Ratings