Hong Kong’s Exchange Fund records HK$202.4 billion 2022 investment loss, outlook uncertain

HONG Kong’s Exchange Fund, which is used to back the Hong Kong dollar, reported an investment loss of HK$202.4 billion (S$33.9 billion) in 2022, the Hong Kong Monetary Authority (HKMA) said on Monday (Jan 30), the worst ever on record in value terms.

In 2021, the exchange fund recorded adjusted investment income of HK$191.9 billion.

For the fourth quarter, investment income amounted to HK$76.4 billion, compared to HK$48.2 billion in the same period of 2021.

“Looking ahead in 2023, financial markets will continue to face significant uncertainties and asset prices are expected to remain volatile,” HKMA chief executive Eddie Yue told a news briefing.

Losses from Hong Kong and foreign equities in 2022 amounted to HK$19.5 billion and HK$61.2 billion respectively, while the loss on bonds was HK$53.3 billion.

“The monetary policies of major central banks will continue to dominate the investment outlook, and financial markets will pay close attention to peak policy rates set by major central banks,” Yue said.

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“On a more positive note, with the relaxation of Covid-prevention measures and the introduction of economic stimulus measures in mainland China, the mainland economy may rebound strongly this year,” Yue added.

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. REUTERS