MPF tipped to plunge 8–9% in August: two million workers hit

In August 2011 MPF was tipped to plunge 8–9% on average, hitting over two million Hong Kong workers — the most painful month since Lehman’s 2008 collapse. The cruellest cut: year-to-date gains were wiped out, with the first eight months down about 6% overall, roughly HK$8,694 lost per person.

How did experts calm nerves?

JPMorgan: the bull market isn’t dead. Investment information director Alan Choi called August an abnormal extreme, with European and US debt issues shattering confidence; but once confidence steadied, he believed equities could recover in the final quarter. JPMorgan’s Asia portfolios had begun bottom-fishing quality H-shares.

RCM: no sign of a bear market. RCM likewise offered reassurance, insisting there was as yet no sign a great bear market had arrived. Director Kenrick Chung argued the US would avoid a double-dip recession and China a hard landing; 2007’s great bull market would not return soon, but a bear market remained distant.

Are bonds really better than equities?

Global bonds were tipped for 2% positive returns in August, beating the market. But experts cautioned: over the long run, bonds rarely beat equities. Short-term shelter and long-term allocation are different things — near-retirees may add bonds, but young members should not abandon equities’ long-term growth potential over one month’s markets.

Compare equity and bond funds’ long-term returns with MPF fund search.