Hong Kong Exchange Fund gains US$13 billion in first half of 2024 amid market rallies

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The war chest that defends the local currency ‘registered a decent investment income in the first half of 2024’, says monetary authority CEO

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The Exchange Fund defends Hong Kong’s currency from attacks by hedge funds and currency traders. Photo: K. Y. Cheng

Enoch Yiu

Published: 5:10pm, 30 Jul 2024Updated: 5:13pm, 30 Jul 2024

Hong Kong’s Exchange Fund, the war chest used to defend the local currency, posted an investment return of HK$104 billion (US$13 billion) in the first half of the year as stock markets rallied globally.

The result is 10 per cent lower than HK$116.4 billion gain in the same period a year ago, the Hong Kong Monetary Authority (HKMA) said on Tuesday. But it is still the fifth-best first-half return since the HKMA began announcing half-year results for the fund in 2003, and is much better than HK$165.4 billion loss in the first half of 2022.

The fund returned HK$41.7 billion in the second quarter, almost a fivefold jump compared with HK$8.4 billion a year ago. The gain is 33 per cent lower than the HK$62.3 billion the fund earned in the first quarter, according to updated data, but is the third consecutive positive quarter after a loss of HK$10.5 billion in the third quarter of 2023.

“Overall, the Exchange Fund registered a decent investment income in the first half of 2024,” said Eddie Yue Wai-man, CEO of the HKMA.

He said the expectation of an interest rate cuts improved market sentiment in Hong Kong and overseas markets.

“In bond markets, despite falling bond prices resulting from rising yields of major government bonds, bond holdings recorded positive returns after interest income was taken into account, as bond yields stayed at a relatively high level,” he said.