Hong Kong Exchange Fund posts third straight quarterly loss, outlook challenging

HONG Kong’s Exchange Fund, which is used to back the Hong Kong dollar, posted an investment loss of HK$100.1 billion (S$17.6 billion) in the third quarter, the Hong Kong Monetary Authority (HKMA) said on Wednesday (Nov 30).

The loss, its third consecutive quarterly one, compared with investment gains of HK$4.0 billion in the same period a year earlier, and a loss of HK$265.5 billion in January-September period this year.

HKMA’s chief executive Eddie Yue said that the chances of having a substantial investment loss for the year is still there while investment environment is set to “remains very uncertain and challenging” in 2023.

The HKMA is the key manager of the Exchange Fund, which is under the control of the financial secretary and invests in equities, bonds, foreign exchange and other securities and assets.

“For the exchange fund, we will be defensive,” Yue told reporters in a press conference. “We will make sure that even with market volatility, the hit on exchange fund will be capped to as small as possible.”

During Q3, Hong Kong equities recorded an HK$27.3 billion investment loss as compared to a HK$0.9 billion gain in April-June period and a HK$26.3 billion loss a year ago.

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Loss on other equities narrowed to HK$19.2 billion for Q3 versus a HK$48.6 billion loss from the previous quarter.

Meanwhile, it saw a loss on bonds of HK$22.8 billion for July-September period comparing with a loss of HK$21.2 billion from the second quarter. REUTERS