Latest news with #ExchangeFund
RTHK
06-05-2025
- Business
- RTHK
Exchange Fund records HK$67.2b in investment income
Exchange Fund records HK$67.2b in investment income Eddie Yue says the Monetary Authority has been diversifying its investments in recent years to minimise risks. Photo: RTHK The Exchange Fund recorded an investment income of HK$67.2 billion in the first quarter, reversing a loss from the previous three months. The fund backing the local currency was boosted in part by rallies in local stocks in the January-March period, as investment interests surged over mainland stocks following AI firm DeepSeek's release of its cost-efficient AI models. The gains compared with an investment loss of HK$20.3 billion in the fourth quarter of 2024 and represented a 7.8 percent increase year on year. Announcing the Exchange Fund's performance on Tuesday, Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue said the authorities have in recent years reduced the holdings of US dollar assets, diversifying the fund's investment portfolio. Speaking in a Legislative Council panel meeting, Yue said while the dominance of the greenback as a reserve currency will not change in the short term, the HKMA has been gradually diversifying its investments to minimise risks. "The investment portfolio is highly diversified, and it not only includes US dollar bonds or US dollar assets, but also many other assets," he said. "At the end of last year, our annual report showed that the holding of our US dollar assets stood at about 79 percent in our two investment portfolios, compared with more than 90 percent a few years ago. So we have gradually diversified our investment portfolio into non-US dollar assets, including renminbi, the euro, the Japanese yen, the British pound, etc." Looking ahead, Yue expects the Exchange Fund to face greater uncertainties for the rest of the year due to the tariffs announced by US President Donald Trump. Meanwhile, Yue said the Hong Kong dollar could strengthen further in the coming months due to high demand. He said the appreciation will depend on several factors, including upcoming IPO activities, stock dividends and reduced carry trade activities, an arbitrage whereby investors borrow low-yielding currencies to buy high-yielding currencies. The HKMA has intervened in the currency market in recent days to stop the Hong Kong dollar from breaching the upper end of its trading range. Yue said the city's currency market continues to operate in a smooth and orderly manner.
South China Morning Post
06-05-2025
- Business
- South China Morning Post
Hong Kong's Exchange Fund posts US$8.7 billion gain amid stock market rally
Hong Kong's Exchange Fund, the war chest used to defend the local currency, reported an investment gain of HK$67.2 billion (US$8.7 billion) in the first quarter, thanks to stock market rallies in the city and overseas. Advertisement In the year-earlier period, the fund posted a gain of HK$62.3 billion, though in the final quarter of 2024, it recorded a loss of HK$20.1 billion, according to data from the Hong Kong Monetary Authority (HKMA) on Tuesday. Over the course of the quarter, the benchmark Hang Seng Index rose 15 per cent as Chinese stocks soared after artificial intelligence start-up DeepSeek rolled out its low-cost, high-performance models. The Exchange Fund, however, was expected to face a number of uncertainties for the rest of the year, after the US' tariff policies triggered market turmoil in April. 'The US tariff policy has created a lot of market uncertainties since early April, but we continue to see capital inflow to Hong Kong stock markets for the many upcoming new listings,' said the de facto central bank's chief executive, Eddie Yue Wai-man, during his quarterly meeting with lawmakers on Tuesday. Advertisement The fund's total assets stood at HK$3.98 trillion at the end of March, a HK$46 billion decrease from the end of last year.
South China Morning Post
04-03-2025
- Business
- South China Morning Post
Hong Kong boosts yuan hub status by expanding mainland China bond collateral initiative
Hong Kong will expand the use of mainland Chinese bonds as collateral to obtain yuan liquidity, furthering efforts to enhance the currency's internationalisation and the city's role as an offshore yuan hub. Advertisement CMU OmniClear, a wholly owned subsidiary of the Exchange Fund managed by the Hong Kong Monetary Authority, and Hong Kong Exchanges and Clearing (HKEX) signed a memorandum of understanding (MOU) on Tuesday that would allow the two entities to enhance cooperation in many areas. The MOU would lead to the realisation of 'cross-asset class efficiencies across equities and fixed income, expanding the use of mainland bonds as collateral [and] enhancing Hong Kong's [role] as a bond issuance centre and [for] developing an international central securities depository in Asia', according to a statement from the HKMA. Hong Kong is stepping up efforts to improve the post-trade securities infrastructure of its capital markets and support the long-term development of the city's fixed-income and currency ecosystem. HKMA chief executive Eddie Yue said the MOU will support the development of Hong Kong's capital markets. Photo: Edmond So 'This MOU signifies an important milestone and our shared commitment to supporting the development of Hong Kong's capital markets,' said Eddie Yue, chief executive of the HKMA. Advertisement
Yahoo
28-01-2025
- Business
- Yahoo
Hong Kong's Exchange Fund reports fifth-best annual return despite fourth-quarter loss
The Exchange Fund, Hong Kong's financial war chest for defending the currency peg, reported a loss for the fourth quarter because of falling bond prices and a valuation loss on non-US dollar assets. For the full year, the fund reported its fifth-best annual return, as a diversified investment approach paid off. The investment return in 2024 fell 3 per cent year on year to HK$219 billion (US$28 billion), the Hong Kong Monetary Authority (HKMA) said on Monday. The Exchange Fund reported its best-ever results for the first nine months of 2024, but that was offset by a loss of HK$20.1 billion in the fourth quarter, ending four consecutive profitable quarters. In the October to December period, Hong Kong equities lost HK$6.7 billion, while foreign exchange valuation loss reached HK$27.4 billion, offsetting a gain of HK$11.3 billion in bonds and HK$2.7 billion in overseas equities. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. The weak performance of the stock markets in the fourth quarter and falling bond prices affected the performance of the Exchange Fund, Eddie Yue Wai-man, CEO of HKMA, said at a media briefing. A stronger US dollar also affected the fund's returns, he added. Hong Kong Monetary Authority CEO Eddie Yue said many factors affected the Exchange Fund's performance in the fourth quarter. Photo: Jonathan Wong alt=Hong Kong Monetary Authority CEO Eddie Yue said many factors affected the Exchange Fund's performance in the fourth quarter. Photo: Jonathan Wong> The Exchange Fund's total assets increased by HK$65.9 billion to HK$4.082 trillion at the end of last year. Since the Hong Kong dollar was pegged to the US dollar in 1983, the fund has become a financial war chest for the HKMA to use to defend the local currency's value. The Exchange Fund paid HK$13.2 billion to the government's fiscal reserves, compared with HK$17.5 billion a year earlier. The payment amount is based on a formula tracking the average return for the past six years to smooth out market volatility. Some lawmakers have urged the HKMA to change its formula so it can increase its payment to plug a budget deficit, but the authority has rejected the idea. Hong Kong's budget shortfall for the current financial year is expected to reach HK$100 billion. The economy grew 1.8 per cent in the third quarter of 2024, slowing from 3.2 per cent in the preceding three months. "The current arrangement is more predictable and avoids uncertainty of payments from the Exchange Fund to the government," Yue said. "The Exchange Fund is aimed at protecting the local currency. While section 8 of the Exchange Fund Ordinance allows a one-off fund transfer to the government, the authorities may need to consider the impact when exercising such power carefully. The ordinance requires any such one-off transfer must not affect monetary stability, although it is worth noting overseas markets remain volatile." The provision allows the Exchange Fund to transfer funds to the government after the financial secretary consults the Exchange Fund Advisory Committee and gains the approval of the Chief Executive and the Executive Council. The HKMA, the city's de facto central bank, invests the Exchange Fund's money in global bonds and equities in Hong Kong and abroad, as well as other long-term projects. "Looking ahead, we should continue to adopt a diversify investment approach for the Exchange Fund," Yue said. For all of 2024, the fund's Hong Kong equity investments gained HK$21.8 billion, swinging from a year-earlier loss of HK$15.5 billion. This was a reflection of the Hang Seng Index's performance. It rose 18 per cent in 2024, snapping a record streak of four annual losses after Beijing unveiled a rescue package in September to support the stock and property markets. US and Hong Kong stocks also rallied after the US Federal Reserve started cutting interest rates. The Exchange Fund, which also invests in overseas stocks - mainly US blue chips - saw a strong gain from these holdings, which earned HK$68.7 billion in 2024, 6 per cent lower than HK$73.6 billion a year earlier. That echoes the performance of the S&P 500 Index, which rose 23 per cent in 2024. Bond investments gained HK$135.6 billion in 2024, 6 per cent lower than a record high HK$144 billion in 2023. The foreign-exchange depreciation on non-US dollar assets resulted in a loss of HK$35.6 billion, much higher than a loss of HK$500 million a year earlier. The change in valuation of the Exchange Fund's investments in overseas property and other long-term projects in the first nine months of 2024 gained HK$28.5 billion, compared with a gain of HK$11.5 billion a year earlier. The HKMA will report the full-year performance of its long-term investments a few months later. This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved. Sign in to access your portfolio
South China Morning Post
27-01-2025
- Business
- South China Morning Post
Hong Kong's Exchange Fund reports fifth-best return despite fourth-quarter loss
The Exchange Fund, Hong Kong's financial war chest for defending the currency peg, reported a loss for the fourth quarter because of falling bond prices and a valuation loss on non-US dollar assets. For the full year, the fund reported its fifth-best annual return, as a diversified investment approach paid off. The investment return in 2024 fell 3 per cent year on year to HK$219 billion (US$28 billion), the Hong Kong Monetary Authority (HKMA) said on Monday. The Exchange Fund reported its best-ever results for the first nine months of 2024, but that was offset by a loss of HK$20.1 billion in the fourth quarter, ending four consecutive profitable quarters. In the October to December period, Hong Kong equities lost HK$6.7 billion, while foreign exchange valuation loss reached HK$27.4 billion, offsetting a gain of HK$11.3 billion in bonds and HK$2.7 billion in overseas equities. The weak performance of the stock markets in the fourth quarter and falling bond prices affected the performance of the Exchange Fund, Eddie Yue Wai-man, CEO of HKMA, said at a media briefing. A stronger US dollar also affected the fund's returns, he added. Hong Kong Monetary Authority CEO Eddie Yue said many factors affected the Exchange Fund's performance in the fourth quarter. Photo: Jonathan Wong The Exchange Fund's total assets increased by HK$65.9 billion to HK$4.082 trillion at the end of last year.
