The Hong Kong Monetary Authority (HKMA) today (31 July) published the unaudited financial position of the Exchange Fund at end-June 2025.
The Exchange Fund recorded an investment income of HK$194.4 billion in the first half of 2025. The main components were:
- gains on bonds of HK$75.3 billion;
- gains on Hong Kong equities of HK$22.9 billion;
- gains on other equities of HK$27.4 billion;
- positive currency translation effect of HK$56.8 billion on non-Hong Kong dollar assets (Note 1); and
- gains on other investments of HK$12.0 billion (Note 2).
Fees on placements by the Fiscal Reserves and placements by HKSAR Government funds and statutory bodies were HK$8.5 billion (Note 3) and HK$8.3 billion respectively in the first half of 2025, with the rate of fee payment at 4.4% for 2025.
Total assets of the Exchange Fund stood at HK$4,297.1 billion at end-June 2025, an increase of HK$216.1 billion from the end of 2024. Accumulated surplus stood at HK$877.9 billion at end-June 2025.
Mr Eddie Yue, Chief Executive of the HKMA, said, “The global financial markets experienced significant volatility in the first half of 2025 due to escalating trade barriers and frictions, as well as intensifying geopolitical tensions in the Middle East. In particular, following the announcement of a series of aggressive tariff measures by the US Government in early April, the global financial markets underwent massive sell-offs, with the equity and bond markets experiencing sharp declines. The S&P 500 fell by roughly 12% over a few days since 3 April. The 10-year US Treasury yield also surged by 50 basis points to around 4.5% within a week in April, registering the sharpest weekly change since the pandemic outbreak in 2020.
As the US and major economies made progress in tariff negotiations, investor confidence stabilised and global equity markets rebounded. The Hong Kong equities also benefitted from capital inflows and the Hang Seng Index rose by about 20% in the first half. As for the bond market, the US Fed kept its monetary policy target unchanged in the first half of the year. Hence, US bond yields stayed at relatively high levels, generating good interest income for the Exchange Fund’s bond portfolio.
Against this backdrop, the Exchange Fund recorded a decent investment income in the first half of 2025, with positive returns across major asset classes of bonds, equities and alternative investments. The weakening of the US dollar against major currencies in the first half also resulted in significant positive currency translation effect on the Exchange Fund’s assets.”
He added, “While the Exchange Fund achieved good returns in the first half of the year, the investment landscape in the second half remains highly uncertain. The uncertainty of US Government’s economic and trade policies will affect international capital flows, as well as corporates’ earnings and investment decisions. Any increase in trade frictions or deterioration in geopolitical situations may cause a slowdown in global economic growth, and may also trigger a sharp reversal of market optimism, bringing shocks to the financial markets. In addition, the pace of adjustments of the Fed’s monetary policy and concerns over the US Government’s debt servicing ability may also affect the performance of US dollar assets and the US dollar against other currencies. While a sizeable part of the Exchange Fund’s investment income in the first half was from the positive foreign currency translation effect, these valuation changes are subject to fluctuations and may not be sustained in the second half of the year.
In the face of the complex and volatile investment environment, the HKMA will continue to adhere to the principle of capital preservation first while maintaining long-term growth. We will continue to manage the Exchange Fund with prudence and flexibility, implement appropriate defensive measures, and maintain a high degree of liquidity. We will also continue our investment diversification to strive for higher long-term returns, and ensure that the Exchange Fund remains effective in achieving its purpose of maintaining monetary and financial stability of Hong Kong.”
| Note 1: |
This is primarily the effect of translating foreign currency assets into Hong Kong dollar after deducting the portion for currency hedging. |
| Note 2: |
This is the valuation change of investments held by investment holding subsidiaries of the Exchange Fund. This figure reflects the valuations at the end of March 2025. Valuation changes of these investments from April to June are not yet available. |
| Note 3: |
This does not include the 2025 fee payment to the Future Fund because such amount will only be disclosed when the composite rate for 2025 is available. |
Annex 1: Exchange Fund Results
Annex 2: Exchange Fund Abridged Balance Sheet
Hong Kong Monetary Authority
31 July 2025
