Hong Kong Equity MPF Funds Rebound 7%; Crisis Losses Still Not Recovered

The 2008 financial tsunami sank Hong Kong MPF by 26% for the year, hammering workers. Two years on, Hong Kong equity MPF funds have finally turned around — but overall, pre-crisis levels remain unrecovered and MPF fund performance still disappoints.

What do the latest MPF returns show?

Hong Kong equity funds recovered, but two-year overall returns are still slightly negative. Lipper data to end-August shows MPF averaging -0.23% over two years — an overall loss of about $708 million, or roughly $290 per worker. Japan equity funds fell hardest at -27.33%; European equity funds, hit by the debt crisis, lost over 20% in two years. Global bond funds were the stars at +11.38%, while Asia, Greater China and Hong Kong equity funds also recouped losses.

What about month-by-month?

After July’s 3.93% gain, August was back in the red at -1.10%. Apart from lower-risk conservative, guaranteed and bond funds, every equity fund category lost money in August — equity funds overall fell about 2.32%, with North America and Japan equity funds down 4.74% to 3.10%.

What’s the industry outlook?

HSBC is bullish on Hong Kong equities into year-end; TransGlobal likes China, Hong Kong and Asia funds. HSBC Global Asset Management’s Harish Sharda sees mixed US data with no “double-dip” in sight, limited downside for global equities, and money rotating from bonds into stocks; Hong Kong remains range-bound but mainland growth supports an optimistic year-end view. TransGlobal’s Lam Yat-ming calls Hong Kong a phase-two bull market — volatility without gains, likely sideways into year-end before a phase-three surge.

To compare charges and returns across MPF funds, visit MPF fund comparison.