24th February 2025
Local markets turn the tables on Trump and tariffs
Key points are as follows:
- The MPF system is tracking towards a February investment gain of approximately 3.49% (as measured by the MPFR All Fund Performance Index as at 19th of February), which would take year-to-date gains to 5.15%; a 3rd best first 2-month result since MPF’s launch. (See Table 1)
- History suggests MPF members can be cautiously optimistic that 2025 could be a good year. Out of the 9 previous occasions MPF produced a positive January and February result, 6 have resulted in a positive full year return with an average return of approximately 14%.
- In absolute dollar terms, should the current trend prevail, February’s month-to-date investment gain would be approximately $47.2bn (or $9,900 per MPF’s 4.75m members), the highest absolute dollar gain since September 2024 to take year-to-date investment gains to $67.9bn (or $14,300 per member).
- HK and China equities lead the way in February, posting a month-to-date return of 11.63%, its 10th best 1-month return since MPF’s launch. Its year-to-date return of 12.45% is the asset class’ 2nd best first 2-month performance since MPF’s launch. (Also see Table 1)
- After factoring in contributions, total MPF assets are presently forecasted to end February at approximately $1.367tr (up $50.7bn from end of January and $75.7bn for year-to-date), a record high since MPF’s launch, and equivalent to an average MPF account balance of $287,500 (up $10,700 from end of January and $15,900 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 has highlighted the positive impact strong local equity markets returns are having on MPF as he offered a post-Lunar New Year assessment of the MPF system.
Based on MPF Ratings’ MPFR All Fund Performance Index, the MPF system is on track to produce a February investment gain of approximately 3.49%, an absolute dollar equivalent of approximately $47.2bn, or $9,900 per MPF’s 4.75m members. If achieved it would take MPF’s first two months’ gain in 2025 to $67.9bn, the equivalent of about $14,300 per member. Since MPF’s launch, consecutive January and February positive performance months have been recorded 9 times, and 6 of those then resulted in a positive full year result with an average annual return of approximately 14%.
Quotes:
The importance of Hong Kong and China equities on MPF results cannot be overstated
“With over 17% market share, Hong Kong and China equities is MPF’s largest asset class. After ending a 3-year losing streak with a 15.90% 2024 return, MPF Ratings’ MPFR Equity Fund (HK & China) Index is already up 12.45% in 2025’s first two months. When local equity markets do well, MPF also does well and benefits most of MPF’s 4.75m members.”
History pointing to a strong 2025?
“MPF’s history suggests members can be cautiously optimistic that 2025 will be a strong year. Of the 9 previous occasions MPF started January and February positively, 6 resulted in a positive full year return with an average return of approximately 14%. A 14% return would rank 6th amongst the best annual MPF results.”
Local markets turn the tables on Donald Trump and tariffs for now….
“If markets are economic lead indicators, then Donald Trump will be disappointed by the strong response by local share markets to his tariff threats. However, the reality is Trump’s bellicose behaviour creates uncertainties. Diversification minimizes uncertainty and the MPFA’s mandated DIS funds, with its broad asset class investments and automatic de-risking mechanism, are ideal to minimize uncertainty. For this reason, DIS funds continue to be MPF Ratings’ preferred investment option for MPF’s 4.75m members.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 19th February 2025)
Source: MPF Ratings
