August 2012 MPF returns: HK$551 per worker, US equity funds shone

This article is a rewrite of a report from September 2012.

Lipper Hong Kong reported MPF schemes gained an average 0.37% in August 2012, and 4.83% over the first eight months. That worked out to just HK$551 per worker in August, or HK$7,195 over the eight months (based on MPFA’s end-June asset total of about HK$384.3 billion).

Why did Chinese and US markets diverge so sharply?

The People’s Bank of China held off cutting reserve requirements while the US Federal Reserve’s third quantitative easing (QE3) was widely anticipated — the two markets moved in opposite directions, and MPF fund performance followed.

August was a contest between “Western equity” and “Asian equity” funds: the West swept the board, with only Korea holding its own in Asia.

Could MPF keep its gains for the full year?

Lipper’s Hong Kong research director said markets were betting on QE3 in the US and continued ECB easing for the eurozone periphery, lifting Western stocks, while weak mainland data left Beijing constrained — stimulus would lift both A-shares and property prices. He expected positive full-year MPF returns to be achievable, as EU leaders, whose remarks had repeatedly spooked markets, would likely tread carefully.

How were trustees wooing switchers before semi-free choice?

With one survey suggesting 10% of workers — about 230,000 people — would switch after the November launch, trustees rolled out new constituent funds, fee cuts and better e-platforms. Manulife launched a new digital platform; Bank Consortium Trust and BOC-Prudential planned renminbi-focused funds. HSBC said it would post MPF specialists in branches and hire for its hotlines, openly noting fees had room to fall.