Euro gloom drags MPF fund performance down 1.1% in a week

Hong Kong MPF fund performance slid 1.12% in the week ended 11 November 2011, Lipper data showed. Greece and Italy both installed new prime ministers — and markets bounced only briefly. Spain then became the speculators’ newest target, with its 10-year bond yield climbing nearly 10% in a week. Lipper’s Hong Kong research director 黃澤銘 said investors still did not believe euro-zone governments could end the sovereign-debt mess, and pessimism kept dragging asset prices down.

How did MPF funds perform last week?

In the week ended 11 November 2011, MPF overall returned -1.12%, with equity funds down 1.82% — far worse than bond funds (-0.22%) and mixed-asset funds (-0.96%). Contagion spread to Spain: its 15 November auction of 12- and 18-month bills raised only €3.16 billion against a €3.5 billion target, and the average 12-month yield leapt to 5.022% from 3.608% at the 18 October auction.

New prime ministers, same sell-off

Greece’s and Italy’s new leaders both brought decades of economic-management experience and years inside EU institutions — credentials that should have revived confidence. Instead, the bounce lasted barely a session. US retail sales, CPI and industrial production all beat expectations, and China loosened liquidity further, yet global equities kept sliding while safe havens — US Treasuries, gilts and Bunds — kept drawing buyers.

Three fronts to watch for MPF performance

黃澤銘 argued that only decisive, coordinated action on several fronts could end the rout: structural reform in the periphery — raising retirement ages, opening sheltered professions, accelerating privatisations; Germany’s push for a tighter fiscal union, including a mechanism to expel members that breach EU rules; and bigger contributions from non-euro states to the European Financial Stability Facility (EFSF) to catalyse a sustained rebound.

What it means for members

MPF is a long game — one bad week is not a reason to churn funds. The week’s dispersion was itself the lesson in diversification: equities fell 1.82% while bonds lost just 0.22%. In choppy markets, checking that your mix matches your risk appetite matters more than chasing the week’s winners. The MPF education hub explains the risk-return profile of each fund category.