24th May 2024
$41bn in earnings set to be added in May as MPF balances exceed psychologically important level
Key points are as follows:
- Led by Hong Kong and China equities, the MPF system is on track to produce a positive May return and a 3rd monthly 2024 gain.
- May’s current month-to-date investment gain is approximately 4.02% (as measured by the MPFR All Fund Performance Index as at 21st of May) (See Table 1) contributing to an estimated year-to-date gain of 6.33%, which if achieved would be MPF’s best first 5 calendar months’ performance since May 2017 and its 4th best since MPF’s inception.
- In absolute dollar terms, a 4.02% gain would be equivalent to an approximate investment gain of $40.8bn (or $8,600 gain per MPF’s 4.75m members) contributing to a year-to-date investment gain of $66.4bn (or $14,000 per member).
- All asset classes presently reported positive returns in May and Hong Kong and China equities’ estimated 7.59% return is expected to top MPF’s May performance table for a 2nd consecutive month, record a 4th consecutive monthly gain in 2024 and deliver its 4th highest first 5 calendar months’ return since MPF’s launch.
- After factoring in contributions, total MPF assets are presently forecasted to end May at approximately $1.23tr (up $44.8bn from end of April and $88.8bn for year-to-date), equivalent to an average MPF account balance of $258,700 (up $9,400 from end of April and $18,700 for year-to-date).
Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today pointed out that owing to ongoing Hong Kong and China equity strength the MPF system is expected to see a 4.02% gain in May which would add an estimated $41bn in investment earnings to MPF average account balances, contribute to MPF’s best first 5 month annual result since 2017, and see average MPF account balances exceed the psychologically critical $250,000 level.
Quotes:
While eyes have been on the US, its Hong Kong and China has been MPF’s biggest 2024 star
“MPF members have shifted a record $9.2bn into US equities this year while withdrawing -$3.1bn from Hong Kong and China share markets. This lack of confidence in local equities contradicts the fact that local shares have now produced 4 consecutive months of positive performance and is currently also on track to deliver its 4th best first 5 calendar months’ performance since MPF’s inception.”
MPF average account balances are once again above $250,000
“Based on our forecasted numbers, MPF Ratings expects average MPF account balances to exceed the psychologically critical $250,000 level for the first time since January 2022. In our experience, $250,000 is the level where MPF members start believing they have a solid pillar for retirement planning.”
Outlook for 2024 – investment sentiment appears to be turning
“Despite continued market volatility, investment sentiment appears to be generally turning positive. While inflation globally remains stubborn and interest rates remain elevated, solid corporate results are underpinning investor confidence. That said, economic uncertainty, up coming UK and US elections and geo-political tensions remain unabated. There is never investing certainty but uncertainty can be mitigated through a disciplined savings, diversified investing and a focus on the long term.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 21st May 2024)
Source: MPF Ratings
