Hong Kong’s Exchange Fund registered investment income of HK$247.2 billion (US$31.80 billion) in 2019 — the second-highest annual total in the fund’s history.
The figure is more than 22 times the HK$10.9 billion that the fund made the previous year.
In 2019, Hong Kong equities and foreign equities posted a return of HK$22.1 billion and HK$100.3 billion respectively, compared to the loss of HK$20.7 billion and HK$38.7 billion in 2018. The bond portfolio generated a return of HK$114.4 billion, nearly double from a year ago.
On a yearly basis, returns from foreign exchanges lost HK$13 billion while returns from other investments were HK$23.4 billion.
The global equity market rally last year was rekindled by ample liquidity but not supported by favorable fundamental factors or corporate earnings. As global stock market valuation already rises to a high level, we are not sure whether the rally can be sustained this year
Eddie Yue Wai-man, chief executive of Hong Kong Monetary Authority
“Although the global economy was clouded by slowing economic growth rates and China-US trade frictions, various central banks have launched monetary easing policies that created surges in the global equity and bond markets,” Hong Kong Monetary Authority Chief Executive Eddie Yue Wai-man said at a Thursday news conference.
However, the HKMA chief cautioned that investment uncertainties will be an issue this year. HKMA is the manager of the Exchange Fund, whose assets are used to protect the Hong Kong dollar’s value.
“These uncertainties include the progress of China-US trade negotiations, geopolitical risks in the Middle East region, the process of Brexit, and a slowdown of the global economy,” Yue warned.
“The global equity market rally last year was rekindled by ample liquidity but not supported by favorable fundamental factors or corporate earnings. As global stock market valuation already rises to a high level, we are not sure whether the rally can be sustained this year.”
The Exchange Fund was established and managed originally by the Currency Ordinance in 1935. The law is now called the Exchange Fund Ordinance
Under the ordinance, the HKMA’s primary objective is to ensure the stability of the Hong Kong currency and the banking system through the Exchange Fund’s financial assets.
