February MPF returns hit 3.54pc, best February since the crisis — equity funds win big

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

Hong Kong stocks rose for a second straight month in early 2012, and MPF followed: February’s 3.54 per cent gain was the best February since 2009, taking the two-month return to 8.72 per cent. But Lipper warned the market looked overbought, with European debt worries lingering.

Why did MPF equity fund returns dominate February?

Warmer global sentiment drew money back into equities in February; Hong Kong stocks gained 6.32 per cent, lifting MPF equity funds 5.46 per cent on average. Greater China (+6.7%) and Hong Kong (+6.49%) funds led, with Japanese and Korean funds also above 5 per cent.

Why do analysts say the market is overbought?

Lipper’s Hong Kong research head noted equities had climbed since early December 2011, with January’s low base flattering gains. By February the pace was slowing, many institutions saw an overbought market, and European debt worries pointed to a near-term correction.

How did bond and guaranteed funds do?

Mixed-asset funds with equity exposure rose 3.44 per cent in February; guaranteed funds gained 0.73 per cent and money market funds 0.03 per cent. Bond funds overall managed 0.18 per cent, though Hong Kong bond funds bucked the trend with a 0.2 per cent loss.

Separately, Premier Wen Jiabao’s March 2012 work report cut the annual growth target to 7.5 per cent. Lipper’s research head judged that still-rapid growth might trim asset values but would not greatly affect investment markets. Members can compare fund categories and track records via the MPF education hub.