Exchange Fund Loses $10.6b

The Exchange Fund recorded an investment loss of $10.6 billion in the first half of the year, the Monetary Authority announced today.

The fund's investment income of $101.4 billion in the second quarter largely offset the investment loss of $112 billion in the first quarter.

Fees on placements by the fiscal reserves amounted to $18.6 billion, while fee payments to placements by government funds and statutory bodies amounted to $5.8 billion. The accumulated surplus decreased by $15.1 billion.

The fund's total assets fell $11.4 billion to $4.1953 trillion.

The authority's Chief Executive Eddie Yue said the outbreak of COVID-19 caused wild swings in financial markets in the first half of the year.

He noted that traditional asset classes, including equities and bonds, which account for the bulk of the Exchange Fund's assets, managed to recoup the investment loss made in the first quarter.

Looking ahead, Mr Yue said the investment environment in the second half of the year remains challenging.

"Geopolitical developments and the risk of resurgence of COVID-19 also add to uncertainties surrounding the markets.

"Against such backdrop, we will strive to preserve defensiveness and liquidity when managing the Exchange Fund's investments, so as to enhance resilience against any market volatility while ensuring sufficient liquidity to maintain Hong Kong's monetary and financial stability."