24th November 2022
Latest estimated results reinforce key MPF member message
Key points are as follows:
- MPF returns are rebounding strongly in November with an estimated aggregate investment gain at the time of writing of $69.9bn (or $15,300 per MPF’s 4.57m MPF members) reducing the system’s estimated year-to-date loss to -$213.7bn.
- After factoring in MPF contributions, November average member account balances are expected to be approximately $222,700, a monthly increase of $16,200 to narrow the annual loss to -$35,000.
- Assuming markets remain flat in November’s final week, total MPF assets are expected to end the month just above the psychologically important $1tr, at approximately $1.018tr, a level first achieved in July 2020.
- Following an October loss of -14.82% (as measured the MPFR Equity Fund (HK & China) Index), MPF’s largest asset class, Hong Kong/China equities, is forecasted to return approximately 20.20%. Its best monthly return since MPF’s inception.
- A forecasted 35.02% month-on-month turnaround in local equities is also the largest monthly swing since MPF’s inception.
Led by Hong Kong/China equity’s best monthly performance in MPF’s two decade history, MPF returns are expected to rebound strongly in November with MPF Ratings, Hong Kong’s independent provider of MPF research, views and opinions, estimating that MPF will log monthly investment gains of $69.9bn, which together with contributions, will see MPF return to the psychologically important $1 trillion total asset level.
While the strong performance rebound will be a relief for MPF’s 4.57m members, Francis Chung (叢川普), MPF Ratings’ Chairman, cautioned against over optimism, pointing out that while local equities is expected to generate returns of approximately 20% in November, the expected record month-on-month turnaround in local equity returns also indicates that markets continue to operate in a highly volatile environment.
Why have Hong Kong and China equities rebounded?
“Hong Kong and China equities are forecasted to produce its best monthly performance since MPF’s inception in November, returning approximately 20%. This is an estimated 35% turnaround from the previous month, which would also be a since inception record, and can be attributed to a combination of oversold markets, positive policy pivots and Hong Kong’s gradual reopening.”
Why the forecasted record investment performance should be viewed with caution
“After a disappointing October, November’s investment rebound will be a relief for MPF members, however, a forecasted record 35% month-on-month swing in local equity performance highlights ongoing and significant volatility which MPF members need to be aware of. The extreme performance change once again reinforces the importance of long-term investing and diversification.”
What should MPF member do?
“MPF Ratings reiterates that diversification and long-term investing, not short-term market speculation, are key to long term wealth creation. Every MPF scheme offers Default Investment Strategy (DIS) funds. They’re low fee ready-made diversified fund options and remain an excellent option for MPF members to consider.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 21st November 2022)
Source: MPF Ratings