Bear market looms: mpf fund performance for the week to 9 September 2011

How did MPF funds perform in the week to 9 September 2011?

In the week ended 9 September 2011, Hong Kong MPF fell 1.72% on average, with equity funds down 2.26% on average — underperforming bond funds (-0.44%) and mixed-asset funds (-1.79%). Ricky Wong, Lipper’s head of research for Hong Kong, noted that developments in Europe deepened investor panic, with the Euro Stoxx 50 volatility index surging 61.1% to 46.73 since 1 August 2011, showing no sign of abating.

How did US and European news weigh on sentiment?

In Europe, the panic was most visible in the Euro Stoxx 50 volatility index, which is derived from the implied volatility of index call and put options.

In the United States, some economists estimated President Obama’s US$447 billion jobs plan could lift 2012 US GDP growth by an extra 2 percentage points — but Republican opposition to new spending items cast doubt on whether the plan could be implemented quickly enough to boost growth.

Was the market sliding into a bear market?

Events in the eurozone and the US had further damaged the global investment outlook, with markets edging ever closer to bear-market territory. Based on the 12 US bear markets since 1960, the Dow Jones and the S&P 500 had to hold above the following levels to keep global equities out of a bear market (as of the 14 September 2011 close):

Both indices sat only just above those lines. Wong advised investors against aggressive strategies at this stage. To compare funds’ long-term track records, use MPF fund performance comparison.