MPF hits all-time high as Hong Kong out-trumps Trump

5th March 2025

3rd widest performance differential in favour of local markets since MPF’s launch

MPF Ratings’ February MPF Performance Survey has now been uploaded.

Key points are as follows:

Despite a pullback in US equities, the MPF system continues its positive start to the year with a February investment gain of approximately 2.44% (as measured by the MPFR All Fund Performance Index), to take year-to-date gains to 4.09%. (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, February’s investment gain is approximately $32.1bn (or $6,700 per MPF’s 4.79m members), to take year-to-date investment gains to $52.9bn (or $11,000 per member).
Hong Kong and China equities lead the way in February, posting a return of 10.83%, its 10th best 1-month return since MPF’s launch. The February performance divergence against US equities was 13.53%, the 3rd widest differential in favour of local equities since MPF’s launch. (Also see Table 1)
After factoring in contributions, total MPF assets end February at approximately $1.352tr (up $35.6bn from end of January and $60.7bn for year-to-date), a record high since MPF’s launch, and equivalent to an average MPF account balance of $282,000 (up $7,400 from end of January and $12,700 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 highlighted that strong local equity markets have driven MPF assets to an all-time record high in February while pointing out a dramatic divergence in relative local and US equity performance.

Based on MPF Ratings’ MPFR All Fund Performance Index, the MPF system produced a February investment gain of approximately 2.44%, an absolute dollar equivalent of approximately $32.1bn, or $6,700 per MPF’s 4.79m members. After factoring in MPF contributions, total MPF assets now stand at a record $1.352tr, moreover, MPF’s first two months’ gain in 2025 is approximately $52.9bn, the equivalent of about $11,000 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 rose 10.83% in February. When local equity markets do well MPF also does well, benefiting most of MPF’s 4.79m 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 out-trump Trump to deliver a salient lesson to market chasers…

“US equities fell in February and Hong Kong and China equity markets were up strongly. The divergence in outperformance was 13.53% which is the 3rd widest performance differential in favour of local markets since MPF’s launch. This performance divergence is a salient lesson for those MPF members who are hoping for a 3rd consecutive 20%+ return from US markets in 2025, a result which is far from certain. What is certain is 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 4.79m members.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 28th February 2025)