Pensions rout: Hong Kong’s MPF on track for first losing year since 2011

Hong Kong’s Mandatory Provident Fund is on track for its first full year loss since 2011, having already shed 2.36 per cent in the first 11 months of this year, according to data from Thomson Reuters Lipper.

It may end up being the MPF’s third worst year since the scheme, which covers 2.5 million employees, was launched in 2000.

The investment fund lost an average of 8.41 per cent in 2011, while its worst year in 2008 -- the height of the global financial crisis -- saw MPF funds plunge an average of 26 per cent.

This compares with a 1.5 per cent gain last year, which was the fund’s worst performance in three years.

Brokers believe there is no reason the market will bounce back in December, increasing the chances that the pension scheme will suffer a loss for the year as a whole.

China equity funds were the top loser, down an average of 11.54 per cent in the first 11 months, while Hong Kong equity funds lost 5.31 per cent in the same period. Both the Hong Kong and Shanghai stock markets hit seven-year highs in the April to early June rally but subsequently lost more than 20 per cent of their value in the third quarter, posing the worst quarterly performance since 2011. Those losses erased all the gains made in the first half of this year.

Mixed asset funds, a popular fund choice which includes both bonds and stocks, reported an average loss of 2.46 per cent. Top gainer was a Korean equity fund which rose 20.27 per cent in the first 11 months.