MPF losses: crash leaves the average worker HK$16,000 poorer on paper this quarter

Losing money respects no one. In the second-half 2011 crash, tycoons and workers alike were losers: Hong Kong equities shed more than HK$4.2 trillion in market value in under a quarter, with the city’s four richest men losing HK$65 billion on paper between them — and MPF losses turned very real for ordinary workers, with the average member an estimated HK$16,000 poorer on paper for the quarter.

What should you do when your MPF is losing money?

Watching MPF losses pile up in a crash hurts, but MPF is a decades-long investment — short-term losses do not determine the final outcome. Lipper’s Hong Kong research director believes capital preservation should come first for now, with money parked in money-market and bond funds; the fund industry likewise suggests new money sit in money-market and conservative funds first, though conservative funds involve switching costs and are best avoided while money is fleeing to safety.

Four tycoons down HK$65 billion for the quarter

Li Ka-shing was the hardest hit of the four, down HK$24.1 billion on his Cheung Kong stake alone in the second half. Cheng Yu-tung bought 272 million Ping An (2318) shares at an average HK$71.5 in March, sold 196 million in two tranches the previous month for a net loss of HK$1.501 billion, and was sitting on a further HK$1.44 billion paper loss on the remaining 76 million shares.

MPF return figures (as of 20 September 2011)

Based on MPF net assets of HK$365.4 billion at end-June 2011, the average worker was more than HK$16,000 poorer on paper in the under-three months from June to 20 September; measured from end-2010 net assets, the year-to-20-September average loss exceeded HK$11,600 per person. Note these figures do not yet reflect a further 1,000-plus-point slide over the two days that followed. MPF had gained in the previous two years; at the trough of the 2008 crisis, the average annual per-person loss was about HK$30,000.

To check MPF fund returns by category, see MPF fund search.