Exchange Fund posts investment loss of $202.4b in 2022

It also ended the year with a negative investment return of 4.4%.

Hong Kong’s primary investment arm recorded an investment loss of $202.4 billion in 2022, the Monetary Authority announced.

The Exchange Fund also had a negative investment return of 4.4% for the year.

 Monetary Authority Chief Executive Eddie Yue said 2022 was an “exceptionally volatile year” for the financial markets, given the effects of the Russia-Ukraine conflict, the COVID pandemic, and Fed hikes.

“This investment environment not only undermined the conventional complementary effects of bonds and equities but has also marked 2022 as the only year in almost half a century during which returns from equities, bonds and major currencies against the US dollar all recorded negative returns simultaneously,” Yue said.
 
Based on the abridged balance sheet, the fund’s total assets also decreased by $559.1b, from $4,570.2b at the end of 2021 to $4,011.1b at the end of 2022. The accumulated surplus stood at $555.5b by end-December 2022.
 
In 2023, Yue  expects financial markets to continue “to face significant uncertainties and asset prices are expected to remain volatile.”
 
“The monetary policies of major central banks will continue to dominate the investment outlook, and financial markets will pay close attention to peak policy rates set by major central banks. The path of inflation is key to all these developments,” he said. 
 
“Recent minutes of the Federal Open Market Committee meetings also pointed out that containing inflation remains the policy focus, and it is anticipated that ongoing increases in the target range for the federal funds rate would be appropriate,” he added.
 
With these uncertainties, Yue said asset prices will inevitably experience sharp swings or adjustments if the actual situation deviates substantially from market expectations.