Heavy SHKP Holdings Dragged MPF Funds Behind the Market in April 2012

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

In late March 2012, two co-chairmen of Sun Hung Kai Properties (0016) were detained by the ICAC, sending the stock down nearly 20%. The fallout reached workers who never bought a single share: several MPF funds held SHKP among their top-ten positions, and their April 2012 returns turned red — trailing both the broader market and the average MPF return.

What happened to MPF equity funds in April 2012?

Concentrated bets on one troubled stock were the main reason MPF funds lagged in April 2012. Across 20 MPF funds counting SHKP among their top-ten holdings (1%–5% of fund assets), half posted negative returns, and 15 came in below the month’s average MPF return of 0.25%. Members can only choose fund categories — not individual holdings — so there was no way to dodge the damage.

SHKP-heavy funds in April 2012

How other fund types fared that month

Lipper’s Hong Kong head of research noted lingering eurozone debt worries and France’s presidential election weighed on sentiment: European equity funds fell 2.06%, global equities 0.79% and North American equities 1%. In Asia-Pacific, Japanese and Korean equity funds lost 2.65% and 2.39%. The bright spots were China equity funds (up 3.8%) and Hong Kong equity funds (up 2.2%), with Greater China equity funds gaining 1.53%. Most brokerages advised investors to steer clear of SHKP shares in the near term.