Exchange Fund Position at end-June 2014

The Hong Kong Monetary Authority (HKMA) today (Tuesday) published the position of the Exchange Fund (Note 1) at end-June 2014. 

The Exchange Fund recorded an investment income of HK$50.5 billion in the first half of 2014.  The main components were as follows: 

• gains on Hong Kong equities amounting to HK$1.9 billion;
• gains on other equities amounting to HK$19.6 billion;
• gains on bonds of HK$26.6 billion;
• an exchange gain of HK$0.4 billion; and
• gains on other investments amounting to HK$2.0 billion (Note 2).

Fee payments to the Fiscal Reserves amounted to HK$13.9 billion in the first half of 2014.  Fee payments on placements by HKSAR government funds and other statutory bodies amounted to HK$4.1 billion.  After deducting the fee payments, interest and other expenses, the Accumulated Surplus (Note 3) of the Exchange Fund recorded an increase of HK$28.9 billion (Annexes 1 & 2). 

Total assets of the Exchange Fund stood at HK$3,071 billion at the end of June 2014, an increase of HK$38.2 billion compared with the end of 2013. 

Commenting on the Exchange Fund results for the first half of 2014, Mr Norman Chan, Chief Executive of the HKMA, said, “The investment environment in the first half of this year was relatively stable.  As a result, our bond and equity portfolios achieved quite remarkable results.  Nevertheless, the investment outlook for the second half of the year is uncertain.  The sustainability of the recovery in the US economy remains to be seen.  There are also great uncertainties in the pace of interest rate normalisation in the US after the end of the Federal Reserve’s asset purchases.  In view of the complex and constantly changing investment environment, the HKMA will as always manage the Exchange Fund in a cautious and prudent manner and continue to pursue investment diversification.” 

Note 1: Unaudited figures.
Note 2: This is the valuation change of investments held by investment holding subsidiaries of the Exchange Fund.
Note 3: This includes gains from the Strategic Portfolio but excludes gains from the investment holding subsidiaries. 

Annex 1: Exchange Fund Results
Annex 2: Exchange Fund Abridged Balance Sheet
Annex 3: Supplementary Figures 

Hong Kong Monetary Authority
29 July 2014