Hong Kong Exchange Fund's 2018 investment income plunged 95% amidst heavy equity losses

The headline figure hit $13.9b compared to $264b in 2017.

The Hong Kong Exchange Fund saw its investment income plunge by a dramatic 94.7% to $13.9b in 2018 from $264b in investment gains in 2017 as the stock market suffered heavy losses.

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There were gains on bonds worth $57.4b and gains on other investments of $24.5b. On the other hand, Hong Kong equities lost $20.7b and other equities loss $38.3b. There was also a negative currency translation effect of $9b on non-Hong Kong dollar assets.

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The Exchange Fund also recorded an investment return rate of 0.3% in 2018 from 7.1% in 2017.

Norman Chan, chief executive of the Hong Kong Monetary Authority (HKMA) identified several downside factors including the interest rate normalisation in the US, Sino-US trade tensions and geopolitical frictions although falling equity prices, rising bond yields and strong US dollar managed to eke out gains.

“Looking ahead, it is very likely that the investment environment in 2019 will remain as unpredictable and difficult as in 2018,” Chan told reporters in a press conference.