The Hong Kong Monetary Authority (HKMA) today (Tuesday)
published the unaudited balance sheet of the Exchange Fund for the
end of June 2002 (Annex 1). The balance sheet
shows that in the first half of 2002:
-
the Accumulated Surplus of the Exchange Fund increased by
HK$11.5 billion, from HK$302.5 billion at the end of December 2001
to HK$314.0 billion at the end of June 2002
-
the foreign exchange assets of the Exchange Fund increased by
US$1.2 billion, from US$111.2 billion at the end of December 2001
to US$112.4 billion at the end of June 2002
-
the total assets of the Exchange Fund decreased by HK$3.2
billion, or 0.3%, from HK$979.2 billion at the end of December 2001
to HK$976.0 billion at the end of June 2002.
The Exchange Fund recorded investment income of HK$22.8 billion
in the first half of 2002. The main components of this income were
(Table 1 of Annex 2):
-
a profit of HK$20.9 billion from bonds and other investments
-
an exchange gain of HK$17.4 billion, mainly due to the
appreciation of the euro and the yen against the US dollar
-
a loss of HK$4.6 billion on the Hong Kong equities portfolio
-
a loss of HK$10.9 billion on other equities.
After deducting HK$3.2 billion of interest and other costs and
HK$8.1 billion representing the sharing of investment income with
the fiscal reserves placed with the Exchange Fund, the Accumulated
Surplus registered an increase of HK$11.5 billion.
Commenting on the half-year Exchange Fund Balance Sheet, Mr
Joseph Yam, Chief Executive of the HKMA, said that, despite
continued volatility in the Hong Kong equity market and difficult
global market conditions, the Exchange Fund earned a reasonable
investment income in the first half of 2002. "While the weak US
dollar contributed to substantial exchange gains and a reasonable
return continued to be earned from the bond markets, these gains
were partly cancelled out by losses in the equity markets," said Mr
Yam.
"The investment return of 2.4% for the first half of 2002 is
higher than the rate of return of the investment benchmark
determined by the Financial Secretary with the advice of the
Exchange Fund Advisory Committee," Mr Yam added. Taking a longer
view, the sound performance of the Exchange Fund is reflected in
the compounded 6.4% annual investment return achieved for the
eight-and-a-half-year period from January 1994 to June 2002,
compared with an average annual inflation rate of 1.9% computed up
to May 2002 (Table 3 of Annex 2).
"The valuation of the assets in the Exchange Fund goes up and
down, reflecting volatility in the financial markets in which we
have investments. Notwithstanding short-term market fluctuations,
the management of the Exchange Fund, in which the fiscal reserves
are deposited, is organised so as to ensure that the Fund is at all
times able to meet liquidity requirements," Mr Yam added.
Looking towards the second half of year 2002, Mr Yam said that
the global investment outlook continued to be clouded by
uncertainties resulting from a number of factors, such as the
sustainability of the global economic recovery currently underway
and the erosion of general confidence caused by recent cases of
deficiencies in audited financial statements in the US. "The HKMA
will continue its prudent management of the Exchange Fund to
achieve a balance in terms of return, risk and liquidity, in
compliance with the guidelines set by the Exchange Fund Advisory
Committee," added Mr Yam.
An accompanying Statement of Valuation of the Hong Kong Equity
Portfolio is published (Annex 3), showing that the market value of
the equity investments of the Portfolio at the end of June 2002
amounted to HK$71.6 billion.
Attachments
Annex 1: Exchange Fund
Balance Sheet
Annex 2: Supplementary
Figures
Annex 3: Statement of
Valuation of the Hong Kong Equity Portfolio
For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Jasmin Fung, Manager (Press), at 2878 8246
Hong Kong Monetary Authority
16 July 2002
