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Home»Finance»Hong Kong’s Exchange Fund posts record 9-month gain of US$28.8 billion as markets rallied
Finance

Hong Kong’s Exchange Fund posts record 9-month gain of US$28.8 billion as markets rallied

November 4, 2024No Comments5 Mins Read
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Hong Kong's Exchange Fund posts record 9-month gain of US$28.8 billion as markets rallied
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The Alternate Fund reported considered one of its finest quarterly returns as inventory markets rallied in Hong Kong and the USA, as a diversified funding strategy helped to swell the monetary struggle chest for defending town’s forex peg.

The fund’s funding return greater than doubled to HK$224.7 billion (US$28.8 billion) within the first 9 months of this yr, making it the very best return on report, in keeping with the Hong Kong Financial Authority (HKMA). The fund earned HK$114.6 billion in the course of the fiscal second quarter that led to September, a turnaround from a lack of HK$10.5 billion in the identical interval final yr.

“With improved market sentiments, we hope we are able to proceed the momentum and obtain constructive returns for the Alternate Fund within the fourth quarter,” the HKMA’s chief government Eddie Yue Wai-man mentioned in a report back to town’s Legislative Council. “We must always be aware that the worldwide markets nonetheless face quite a lot of uncertainties in October. HKMA will proceed to carefully monitor the market conditions and undertake a diversified approached to take a position the Alternate Fund in a prudent method.”

Do you may have questions in regards to the largest subjects and traits from all over the world? Get the solutions with SCMP Information, our new platform of curated content material with explainers, FAQs, analyses and infographics delivered to you by our award-winning staff.

The fund, which traces its root to Hong Kong’s Forex Ordinance of 1935 to again the issuance of town’s forex notes, has notched up 4 consecutive quarters of positive aspects. For the reason that Hong Kong greenback’s peg to the US greenback in 1983, the fund has advanced right into a monetary struggle chest for the HKMA to deploy to defend the native forex’s worth in opposition to hedge funds and foreign-exchange speculators.

Pedestrians stroll previous the USD, GDP, RMB and the opposite nation financial institution notes displayed outdoors a forex trade store at Sheung Wan on October 21, 2022. Photograph: Yik Yeung -man alt=Pedestrians stroll previous the USD, GDP, RMB and the opposite nation financial institution notes displayed outdoors a forex trade store at Sheung Wan on October 21, 2022. Photograph: Yik Yeung -man>

The HKMA, town’s de facto central financial institution, invests the Alternate Fund in world bonds, abroad actual property, equities in Hong Kong and overseas, in addition to different long-term initiatives.

The fund’s Hong Kong fairness investments gained HK$21.9 billion within the third quarter, tracing the 19 per cent leap within the metropolis’s Cling Seng Index, turning round from final yr’s HK$5.6 billion loss. Within the first 9 months, Hong Kong equities earned HK$28.5 billion for the fund owing to the Cling Seng’s 24 per cent surge, in contrast with a HK$10.5 billion loss throughout the identical interval a yr in the past.

Shares rallied after the US Federal Reserve lowered its key rate of interest by 50 foundation factors on September 18, the primary discount in 4 years, and gathered steam after Beijing unleashed daring stimulus measures to reverse the housing market hunch and enhance the inventory market and financial system on September 24.

Abroad shares nourished the fund, incomes it HK$18.2 billion in the course of the third quarter, a turnaround from a lack of HK$8 billion a yr earlier. Inventory positive aspects jumped 63 per cent within the first 9 months from a yr earlier to HK$66 billion.

That echoes the efficiency of the S&P500 index in New York, which rose 5.5 per cent within the third quarter and 20.8 per cent within the nine-month span.

The Alternate Fund’s bond investments gained HK$66.4 billion within the third quarter, 4 instances of acquire of HK$15.7 billion within the year-earlier quarter. Bonds earned HK$124.3 billion within the first 9 months, in contrast with HK$73.7 billion a yr earlier.

Within the first 9 months, the robust positive aspects from shares and bonds have been offset by a loss from foreign-exchange depreciation on non-US greenback belongings at HK$8.2 billion, narrowing from a lack of HK$9.3 billion a yr earlier. Within the third quarter, it had a acquire of HK$8.1 billion, a turnaround from a lack of HK$7.5 billion in the identical quarter a yr earlier.

The ICE US greenback Index declined 4.8 per cent within the third quarter in opposition to different main currencies, and dropped by 0.5 per cent within the first 9 months.

The Alternate Fund’s investments in abroad property and different long-term initiatives gained HK$14.1 billion in worth within the first half of the yr, in contrast with a acquire of HK$16.5 billion a yr earlier.

The HKMA will report the third-quarter and nine-month efficiency of its long-term investments at a later date.

This text initially appeared within the South China Morning Put up (SCMP), essentially the most authoritative voice reporting on China and Asia for greater than a century. For extra SCMP tales, please discover the SCMP app or go to the SCMP’s Fb and Twitter pages. Copyright © 2024 South China Morning Put up Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Put up Publishers Ltd. All rights reserved.



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9month billion Exchange fund gain Hong Kongs markets posts Rallied Record US28.8
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