28th September 2022
Market losses drive MPF total assets below major threshold
Key points are as follows:
- September estimated MPF investment loss at the time of writing is -$69.7bn (or -$15,200 per MPF’s 4.57m MPF members). September MPF loss is the 8th monthly loss out of 9 in 2022.
- Estimated Year-to-date loss is approximately -$246.5bn, or -$53,800 per MPF member.
- After factoring in MPF contributions, September average MPF member account balance is expected to be approximately $213,700, a monthly decrease of $14,400, and $43,900 for the year.
- Assuming markets remain unchanged in September’s final week, total MPF assets are expected to end the month below the important $1tr level, at approximately $977bn, for the first time since breaching the milestone in July 2020.
- Global inflation, interest rates and recession concerns continue to be the biggest market risks.
In what will be disappointing news Francis Chung (叢川普), Chairman of MPF Ratings, Hong Kong’s specialist independent MPF research group, today announced they are expecting total MPF assets to fall to approximately $977bn, marking the first time MPF assets have fallen below the important $1trillion level which the system breached in July 2020 after two decades in operation.
A confluence of global economic concerns now sees average MPF account balances fall to approximately $213,700 and sees the unwinding of two years’ worth of MPF market contributions and market gains.
Confluence of concerns see two years of MPF values unravel
“Two years after exceeding $1trillion, MPF assets are expected to fall below the important threshold. A global confluence of inflation, interest rate and recession concerns now is likely to see MPF total assets fall to $977bn. Members will be extremely disappointed.”
MPF Ratings reiterates that MPF is a highly secure and robust system
“It is important to emphasize that while average MPF member account balances are now back to June 2020 levels, accrued market losses are not a result of the MPF system. Investment gains and losses are a function of financial markets, something the MPF system does not control. The MPF system safeguards member assets and on this point MPF members can be confident that the MPF system is highly robust and highly secure.”
What should MPF member do?
“It is imperative that MPF members remain invested for the long term 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 remains an excellent option to consider.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 23 September 2022)
Source: MPF Ratings