Hong Kong’s MPF pension fund swimming in red ink in May

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David Wong Yau-kar, the new Chairman of the Mandatory Provident Schemes Fund Authority, poses for a photograph in Beijing. Photo: Simon Song

Hong Kong’s Mandatory Provident Funds bled red ink in May with the 481 funds suffering an average loss of 0.79 per cent, making it the worst month for the pension scheme this year, according to data company Lipper on Tuesday.

Most categories of funds investing in bonds, stocks or currency all suffered losses ranging from 0.2 per cent to 2 per cent during May, with the China equities funds the worst performer with a loss of 2.33 per cent, and they were followed by the Asia Pacific excluding Japan equity funds with a loss of 2.26 per cent and Hong Kong equities with a loss of 1.83 per cent.

The MPF however could still outperform the Hang Seng Index which dropped 2.5 per cent in May, in a sharp reversal to April’s 13 per cent gain.

May is the first month for MPF investment’s to go into the red compared with a strong 5.28 per cent gain in April due to mainly to rallies in Hong Kong and the mainland markets to 7-year highs.

The MPF covers the 2.5 million employees of the city. It has reported a return of 2.67 per cent in the first quarter and a rise of 1.5 per cent last year, the lowest in three years.

The exception in MPF investments are the single market equities funds investing in US, Europe, South Korea and Japan. The best performer is a healthcare fund with a return of 2.86 per cent in May, followed by a Korea equity fund at 2.26 per cent, Japan equities at 1.81 per cent and US equities at 1.33 per cent.

About 40 per cent of the HK$500 billion in MPF funds is invested in mixed-asset funds, 39 per cent in equities and the rest in conservative funds, bond funds and money market funds, according to data from the Mandatory Provident Fund Schemes Authority (MPFA).