23rd February 2023
MPF balances to decline as markets give up some of January’s gains
Key points are as follows:
- MPF’s average investment loss as of 20th February was -1.77% (as measured by the MPFR All Fund Performance Index).
- Total MPF assets are presently forecasted to end February 2023 at approximately $1.091tr, or an average account balance of $238,600 per MPF’s 4.57m members.
- After producing its strongest January ever HK/China equities (as measured the MPFR Equity Fund (HK & China) Index) is giving some gains back, currently down -4.41% in February.
- Despite February’s expected decline MPF returns are still positive year-to-date.
- Equity declines, driven by continued inflation and interest rate concerns, reinforces the MPFA’s November 2022 circular announcing efforts to promote investment diversity to meet the pre and post retirement needs of MPF members.
Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s leading independent provider of MPF research, views and education is forecasting that, after factoring in contributions, MPF will end February at approximately $1.091tr in size, or the average equivalent of $238,600 per MPF’s 4.57m members. February’s MPF average investment return at time of writing is estimated at -1.77% (as measured by MPF Ratings’ MPFR All Fund Performance Index).
“After a record January, it is not entirely unexpected that HK/China equities is giving back some returns. Local markets are being affected not only by global equity concerns over rising inflation, interest rates, and the potential of a prolonged economic slowdown, but it’s also evaluating the impact of Wednesday’s budget announcements.”
What should MPF member do?
“Last November the MPFA announced fund approval reforms to promote better investment diversity. The reversal of local equity returns in February highlights the risks of short term investing and not diversifying. It is pertinent to remind MPF members that every MPF scheme offers Default Investment Strategy (DIS) funds. They’re low fee ready-made diversified fund options that are sensible long term option for most MPF members to consider.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 20th February 2023)
Source: MPF Ratings