Editorial | Hong Kong Exchange Fund reaps financial rewards
- Strong bond market drives rebound by war chest that helps defend Hong Kong dollar and hopes are high it will continue
The Hong Kong Exchange Fund is for long-term investment. Recent short-term market volatilities, though, have produced attention-grabbing headlines.
They are a useful reminder that the fund belongs to Hong Kong people, who should periodically inspect its ups and downs to make sure those put in charge of it are doing their job properly. The good news is that the fund has reported a big rebound so far this year, after a strong bond market helped narrow third-quarter losses.
Its investments gained HK$110.9 billion in the first nine months, a turnaround from the record loss of HK$278.8 billion last year.
The fund had a HK$5.5 billion loss in the last quarter, which significantly narrowed from a loss of HK$113 billion during the same period a year earlier, the third-biggest quarterly loss on record.
Set up to defend the Hong Kong-US dollar peg, its investment performance tracks the directions of the overall market and interest rates. With the local base rate and that of the US Federal Reserve’s target rate hovering at 5-plus per cent, bonds have been doing well.
