27th July 2022

BUT MAJOR EARNINGS AND ECONOMIC DATA COULD PROVE CRUCIAL

Key points are as follows:

• Major US earnings and economic announcements could prove crucial to MPF account balances.
• July’s estimated MPF investment loss at the time of writing is -$3.4bn (or -$700 per MPF’s 4.59m MPF members), stemming year-to-date losses, which is still estimated to exceed $150bn (-$156.1bn, or -$34,000 per MPF member).
• After factoring in MPF contributions, July’s average MPF member account balance is expected to rise to $230,800, a modest increase of $100 over the month.
• Assuming markets remain steady in July’s final week, total MPF assets are expected to end the month at approximately $1.059tr, an increase of $0.6bn from the previous month.
• Variance between US and HK/China equity returns in July highlights need for diversification.

After a difficult 1H 2022 MPF Ratings, Hong Kong’s specialist independent MPF research group, is expecting the MPF system to consolidate returns in July, but according to MPF Ratings’ Chairman, Francis Chung (叢川普), things could quickly change over the last few days of July as global markets brace themselves for major US earnings and economic announcements.

Quotes:

Major US earnings and economic data could prove crucial

“End of month US earnings and economic data could prove crucial to MPF account balances. The Federal Reserve has a mid-week meeting, US GDP numbers will be announced and some of the world’s biggest companies, including Apple and Amazon, will release their earnings. Markets remain highly sensitive to news so we may see market volatility.”

Variance between HK/China and US equities highlights the importance of diversification

“MPF members invested in HK/China equities are seeing losses on both a relative and absolute basis in July. Over the month, US equities is MPF’s best performing asset class while HK/China equities is the worst, highlighting the importance of investment diversification.”

What should MPF member do?

“The HK/China and US equity performance difference shows markets go up and down, and do so at different times. Be well diversified to smooth out such volatility. The MPFA’s Default Investment Strategy (DIS) Funds are low fee ready made diversified fund options. For the vast number of MPF members DIS is an excellent option to consider.”

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