26th May 2025
Local market resilience set to give MPF members a record surprise
Key points are as follows:
- An estimated monthly gain of 3.82% (as measured by the MPFR All Fund Performance Index) as at 21st of May places the MPF system on track for its best first 5-month performance since 2017. (See Table 1)
- If results remain unchanged, in absolute dollar terms, May will see a month-to-date investment gain of approximately $50.9bn (or $10,600 per MPF’s 4.79m members) and a year-to-date investment gain of $77.5bn (or $16,200 per member).
- Led by Hong Kong and China equities’ estimated 7.92% month-to-date gain, all major equity markets are positive for the month, while local equities estimated monthly return has it on course for a year-to-date result of 16.06%, its 4th best first 5-month result since MPF’s launch. (Also see Table 1)
- Moody’s decision, announced on the 16th of May, to downgrade the US sovereign credit rating from Aaa to Aa1 has had a significant effect on Global bonds, down -0.84% month-to-date. (Also see Table 1)
- Despite negative news surrounding the US, total MPF assets inclusive of contributions could end May at approximately $1.389tr (up $54.7bn from April and up $97.5bn for year-to-date), a record high since MPF’s launch, and equivalent to an average MPF account balance of $289,700 (up $11,400 from April and up $20,300 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 addressed the significant enquiries his company has received on the impact of MPF following the recent announcement by Moody’s to downgrade the US sovereign credit rating by sharing his company’s estimated investment returns for the month of May.
Based on MPF Ratings’ MPFR All Fund Performance Index, the MPF system is forecasted to produce a May investment gain of approximately 3.82%, an absolute dollar estimated equivalent of $50.9bn, or $10,600 for MPF’s 4.79m members. Notably, May’s expected positive result will have a dramatic effect on MPF’s total assets. Inclusive of contributions, MPF could end May at approximately $1.389tr, the highest level ever recorded, and equivalent to an average MPF account balance of $289,700.
Quotes:
As US Treasuries sink, Hong Kong’s MPF swims…
“Moody’s decision to downgrade the US sovereign credit rating from Aaa to Aa1 had the immediate impact of sending bond yields higher, but while the US lurches from one economic challenge of its own doing to another, Hong Kong’s MPF system remains resilient and on track for its highest total asset size ever.”
Hong Kong and China equities performance set to carry MPF to an all-time level
“After factoring in contributions MPF’s total size could reach an all-time record of $1.389tr by the end of May, equivalent to an average account balance of $289,700 for MPF’s 4.79m members. This success is being underpinned by strong Hong Kong and China equity performance which is expected to be up around 7% in May and 16% year-to-date, as measured by MPF Ratings’ MPFR Hong Kong and China Equity Fund Index.”
What is the effect of Moody’s US sovereign downgrade on MPF?
“There has been speculation that Moody’s US sovereign downgrade could lead to a sell-down of US bonds by MPF fund managers due to MPF investment guideline restrictions, but MPF Ratings doesn’t believe this is likely to happen. Despite the downgrade, the US remains the world’s safe haven economy, and this is not the first time a ratings agency has downgraded the US. MPF Ratings steadfastly believes the MPFA and MPF trustees will work collaboratively to ensure the best outcome for members.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 21st May 2025)
Source: MPF Ratings
