The Hong Kong Monetary Authority (HKMA) announced today
(Thursday) the Exchange Fund results* for
2009.
The Exchange Fund recorded an investment income of HK$106.7
billion in 2009. The main components were (Annex 1)
- a valuation gain on, and dividends from, Hong Kong equities
amounting to HK$48.9 billion
- a valuation gain on, and dividends from, other equities
amounting to HK$48.7 billion
- an exchange valuation gain of HK$9.8 billion, mainly as a
result of the appreciation of other currencies against the US
dollar
- a valuation loss, net of interest, on bonds and other
investments of HK$0.7 billion.
After deducting interest and other expenses, the net investment
income in 2009 was HK$103.2 billion. Taking into account fee
payments to the Fiscal Reserves and placements by HKSAR government
funds and statutory bodies of HK$34.7 billion, and adding back the
valuation gain and dividend income on the Strategic Portfolio of
HK$4.3 billion, the Accumulated Surplus recorded an increase of
HK$72.8 billion (Annex 1).
The Abridged Balance Sheet (Annex 2) shows that the total assets of the
Exchange Fund increased in 2009 by HK$591.4 billion, from
HK$1,560.3 billion at the end of 2008 to HK$2,151.7 billion at the
end of 2009. The increase is mainly attributable to capital inflows
into the Hong Kong dollar.
The 2009 Exchange Fund investment return is 5.9%**. To reflect the long-term nature of the Fund, the
HKMA is also releasing the average investment returns of the
Exchange Fund over a number of different time horizons. The average
return was 3.8% over the last three years, 4.8% over the last five
years, 5% over the last 10 years and 6.1% since 1994***. These returns compare favourably with the
average inflation rate during the corresponding period (Chart 1 and Table 1).
Commenting on the Exchange Fund results for 2009, Mr Norman
Chan, Chief Executive of the HKMA, said that major financial
markets recovered in 2009 from the market turbulence in 2007 and
2008. "The investment return of HK$106.7 billion for the Exchange
Fund in 2009 is the second highest on record in terms of amount.
Looking back, the investment environment last year remained
extremely uncertain and volatile. Major equity markets were still
under pressure in the first quarter, but started to recover from
the turbulence created by the financial crisis from the second
quarter because of the positive impact of stimulus packages and
greater investor optimism. US bond yields, on the other hand, saw a
sharp rise during the year, especially at the long end, with
concerns over the supply of US government bonds and uncertainties
about the timing and pace of the exit from monetary easing."
Regarding the outlook for the year ahead, Mr Chan added that the
prospects for the global financial markets are far from certain.
"While there is a modest recovery in the global economy, its
sustainability remains to be seen. The global financial system has
stabilised but its recovery is not without fragility. In
particular, global banks are expected to face increasing pressure
to meet capital and other financing needs in the coming two to
three years. In addition, the performance of the financial markets
is clouded by the considerable uncertainty about the timing of the
exit from monetary easing. In sum, I expect that the uncertainties
surrounding the movements of interest rates, international fund
flows and exchange rates may lead to considerable volatility in
global asset markets in 2010," he said. "The HKMA will continue to
be vigilant and manage the Exchange Fund prudently in accordance
with the Fund's investment objectives set by the Financial
Secretary on the advice of the Exchange Fund Advisory
Committee."
* Unaudited figures
** This return excludes the performance of
the Strategic Portfolio.
*** Averages over different time horizons
are calculated on an annually compounded basis.
Annex 1: Exchange Fund
Results
Annex 2: Exchange Fund Abridged
Balance Sheet
Chart 1: Investment
Return of the Exchange Fund (1994 to 2009)
Table 1:
Investment Return of the Exchange Fund in Hong Kong dollar
terms
Remarks at Press Announcement by Mr Norman T.L. Chan, Chief
Executive of the HKMA
Powerpoint Presentation
For further enquiries, please contact:
Hing-fung Wong, Manager (Communications), at 2878 1802 or
Yokee Wong, Manager (Communications), at 2878 1213
Hong Kong Monetary Authority
28 January 2010
