Hong Kong wealth fund suffers staggering losses as city economy falters
Hong Kong’s wealth fund has suffered staggering losses in the first few months of this year, as the financial hub’s economy falters.
The city’s GDP shrank four per cent in the first quarter of 2022, according to estimates published by Hong Kong’s census and statistics department on Tuesday.
While the Exchange Fund, managed by the city’s central banking body – the Hong Kong Monetary Authority – lost £3.4bn on its portfolio of domestic and overseas stocks.
It also recorded the largest quarterly investment loss since the start of 2020, as strict Covid-19 measures helped burn a £11.3bn hole in the Fund.
“The quarterly loss was about one per cent of the fund’s portfolio size, versus the stock market’s five per cent loss in the same period,” deputy chief executive Howard Lee told lawmakers.
“We strive for a conservative and defensive approach to weather through good and bad market conditions.”
Despite its reopening to tourists – and ultimately business – on Sunday, the financial hub is bracing for a difficult year as it looks to bounce back after its latest wave of the pandemic.
Analysts at Capital Economics said that while there are signs that activity is “rebounding”, they expect the recovery to “prove weak” as “rising interest rates, softer global trade and an absence of mainland visitors will hold back the city’s economic recovery in the coming months.”