Hong Kong’s Mandatory Provident Fund, the city’s compulsory pension scheme covering over 4 million people, recorded almost HK$26,000 ($3,355) in losses per person, on average, from January to mid-April, according to MPF consultancy Gain Miles.
Against the backdrop of the novel coronavirus outbreak which caused great volatility in global markets, the MPF saw an average loss of 11.6 percent in the first quarter of this year. In the single month of March, the fund lost HK$70 billion.
Against the backdrop of the novel coronavirus outbreak which caused great volatility in global markets, the MPF saw an average loss of 11.6 percent in the first quarter of this year
Gain Miles Group Managing Director Michael Chan Yui-lung said the global equity market reported further losses in March due to the global pandemic, but mainland and Hong Kong stock markets remain relatively attractive to investors.
Chan said he expected the MPF to stay flat or record slight returns this year as there are signs the coronavirus outbreak may be slowing down. Quantitative easing exercised by central banks around the world may also help improve the performance of bond markets.
He added that the fund might record positive returns in the coming three to six months if the virus outbreak eases and market confidence returns.
In the first three months of this year, the MPF lost about HK$100 billion to HK$868 billion in total assets. The MPF adviser said this figure might rebound to HK$900 billion if market conditions get better in April.
At the end of March, all three major component indices of the Gain Miles index fell, with the Equity Fund Index dropping by 10.3 percent. European equity funds performed the worst with losses of 23.5 percent. The mixed-asset fund index dropped 8.8 percent. The Fixed Income Fund Index remained stable at 126 points.
On April 14 and 15, Gain Miles has conducted an online survey about the government’s latest relief package to boost employment is worth up to HK$80 million.
The survey which covered about 108 organizations found that 89 percent of surveyed employees said the relief program can help employers ride out the storm, but 69 percent of them believe that there will be layoffs.
A total of 76 percent of respondents said they will apply for the scheme and will not cut jobs. Meanwhile, 55 percent of respondents are not in favor of suspending MPF contributions.
Gain Miles expects MPF contributions for the first quarter of the year may drop by 5 to 10 percent.
