MPF swings from gain to loss: August crash leaves workers despairing

Hong Kong equities rose for three straight sessions at August’s end, gaining over 600 points and reclaiming several moving averages — but nowhere near enough to offset the month’s carnage. The Hang Seng fell from 22,440 to 20,534, down over 1,900 points or more than 8%: Hong Kong’s worst month since the October 2008 tsunami.

How much did MPF lose?

Lipper data to 29 August: MPF lost over 6% in a single month, wiping out the 1.58% gains built over the first seven months of 2011. MPFA figures showed about HK$25.9 billion lost in August — over HK$10,000 per worker on average. The government’s HK$6,000 handout was still at the registration stage, months from payout, while the mini-crash had already vaporised over HK$10,000 from each account.

Why such a steep fall?

S&P’s unprecedented US sovereign downgrade stripped America of its top rating; the eurozone debt crisis worsened, piling misery on global markets. Beneath the fragility lay missing economic fundamentals — the first half’s decent rally was an illusion built on Western quantitative easing.

What next?

The bearish factors did not vanish with August; investor wariness persisted and another sharp sell-off could strike anytime. The outlook hinged on US and European policy. One thing stayed constant: MPF is a long-term investment, and short-term storms should not derail long-term plans. Check your portfolio’s resilience with MPF fund search.