27th June 2022

MPF HALF YEAR LOSSES EXPECT TO TOTAL $150BN AS SLIDE CONTINUES IN JUNE

Key points are as follows:

• Major global equity markets leading MPF to another monthly loss.
• June’s estimated MPF monthly, quarterly and year-to-date investment losses are estimated to be -$23.1bn, -$72.6bn and -$148.8bn.
• After factoring in MPF contributions, June’s average MPF member account balance is forecasted to fall to $231,400, a decline of -$26,300 from 31 December 2021 ($257,700).
• June’s total MPF assets are expected to end the month at approximately $1.061tr, the lowest total assets since October 2020.
• MPFA’s emphasis on DIS and commitment to lower fees are positive messages for MPF members looking for protection from a financial market volatility and rising inflation.

MPF Ratings, Hong Kong’s specialist independent MPF research group is expecting a June estimated loss of -$23bn to bring MPF’s accumulated 2022 first half year loss to around -$150bn. MPF Ratings’ Chairman, Francis Chung (叢川普), noted that while traditional financial asset returns will struggle in periods of rising inflation and interest rates, the MPFA’s focus on DIS and eMPF may offer members some longer term benefits from the current market correction.

Quotes:

MPF is a victim of the bear not the bear

“With a number of markets at or near bear market territory MPF members will be disappointed with this year’s losses, but it’s important to point out the MPF system is not the cause, rather it too is a victim, of global and economic circumstances.”

Falling markets brings greater focus attention on diversification, and fees and charges

“Markets go up and down. The way to smooth out the volatility is to be well diversified. The MPFA’s Default Investment Strategy (DIS) Funds are ready made diversified fund options that are also fee competitive too. Longer term, the MPFA’s eMPF initiative will see fees reduce even further benefitting all members.”

What should MPF member do?

“Time in markets, not market timing, is the key to unlocking long term wealth creation. Falling markets can offer good opportunities to invest in quality assets at lower prices. Members should also remain invested and diversified to maximise the compounding effect that sees wealth grow exponentially over their working life.”

Table 1: MPF fund average investment returns by asset class (as of 22nd June 2022)