MPF loses 1.5% in June as Hong Kong equity funds sink

June’s MPF was hit by the Greek debt crisis, tight mainland liquidity and high inflation — the average overall return stayed in the red for a second month. Across 407 MPF funds, the average loss was 1.54%, with Hong Kong equity funds the worst at -4.32%.

Which funds fell hardest?

Hong Kong equities -4.32%; Greater China and China equities -4.05% and -4.06%. Overall equity funds averaged -2.56%; among global equities only Japan posted a gain (+1.14%). Bond funds averaged +0.06%; money market funds -0.01%.

Why the drop?

Greek debt fears, the end of US QE2 with no QE3, China’s floods and droughts pushing up food prices plus monetary tightening. Thomson Reuters Lipper’s Hong Kong research director Billy Wong said Western markets feared a slowdown while tight mainland liquidity starved some SMEs of cash or bankrupted them — dragging Hong Kong and Greater China funds down more than Western ones.

Any second-half turnaround?

Wong expects overall MPF and Hong Kong equity funds to return to positive territory in H2. Tailwinds include QE2’s ample liquidity staying in markets for 18 months, low rates, and next year’s US election — in 10 of 12 election cycles since 1960, the third and fourth presidential years saw strong market gains.

MPF returns swing month to month — the long game is picking the right mix. Compare funds at MPF fund comparison.