[GUM MPF Mid-Month Update] US Stocks Surge, Dual Gains in Stocks and Bonds in December, Successful Recovery in 2023 with Projected Earnings Exceeding HKD $5,000

Dec 20, 2023
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Table 1: Overall performance of MPF and average return in the first half of December (as of 15 December 2023)

IndexValueReturns for December 2023 (Half-month)2023 YTD Return (%)
GUM MPF Composite Index222.891.0%2.3%
GUM MPF Equity Fund Index289.250.4%-0.7%
GUM MPF Mixed Asset Fund Index227.322.0%5.9%
GUM MPF Fixed Income Fund Index125.180.6%2.8%
Average MPF Gain/Loss Per Member Note 1 (HK$)+2,369+5,329

Table 2: Performance of MPF Sub-Category Funds Index with
Top 2 Assets Under Management (AUM) in Each Category (as of 15 December 2023)

CategorySub-category Fund IndexReturns for December 2023 (Half-month)2023 YTD Return (%)
Equity Funds Hong Kong Equity Funds-2.2%-16.3%
United States Equity Funds+3.4%+26.6%
Mixed Asset FundsMixed Asset Funds (80 – 100% Equity)+1.5%+4.8%
Mixed Asset Funds (60 – 80% Equity)+1.6%+4.1%
Fixed Income FundsMPF Conservative Funds+0.2%+3.4%
Guaranteed Funds+0.4%+1.5%
DIS FundsDIS Core Accumulation Funds+2.9%+13.0%
DIS Age 65 Plus Funds+2.8%+6.6%

As of 15 December:

  • In the first half of December, the overall MPF performance continued to rise, recording an average return of HKD 2,369 per person.
  • Equity, Mixed asset, and Fixed-Income Fund Indices recorded positive returns in the first half of December. Among them, Mixed Asset Funds performed the best, rising by 2.0%, while Equity funds and Fixed-Income Funds increased by 0.4% and 0.6% respectively.
  • The Hang Seng Index continued to hover around 16,500 points, while Hong Kong stock market funds experienced a continuous decline (-2.2%). In contrast, the US equity fund index reached a new high for the year, rising by 3.4% in December.
  • US Federal Reserve Chairman Powell stated after the December FOMC meeting that although there is currently no evidence of an economic recession, he does not rule out the possibility of a recession next year. As the policy interest rates are already at or near their peak, further interest rate hikes are unlikely for the time being. He also indicated that interest rate cuts would not necessarily wait for inflation to fall to 2%. It is widely believed in the market that the Federal Reserve will begin cutting rates in March next year.
  • Mixed Asset Funds benefited from the upward trend of global equity markets and the expectation of interest rate cuts, showing outstanding performance. Additionally, Bond Funds performed well due to the expectation of interest rate cuts.
  • Currently, MPF Conservative funds continue to benefit from the high-interest environment, recording stable positive returns. However, If interest rates begin to decline next year, the returns will correspondingly decrease.

GUM Investment and Strategic Consultant Martin Wan pointed out, “Looking back at the performance of MPF in 2023, US stocks delivered impressive returns of nearly 27% during the period, outperforming other asset classes. However, Hong Kong stocks declined by nearly 16%, as their undervalued nature failed to attract buying interest. As the market anticipates the end of the US interest rate hike cycle, there is a recalibration of asset pricing across various categories. In the first half of next year, we expect a dual win in stocks and bonds, with mixed-asset funds poised to deliver favorable returns.”

Note:

  1. Calculation based on total MPF assets of previous month end and total MPF Scheme members 4,694,000 as of 31 March 2023. The latest average assets per member was HK$236,898 as of 30 November 2023. Return of GUM MPF Composite Index is as of 15 December 2023.

*The growth of all fund categories indexes is calculated by asset-weighted point-to-point growth. The data for December 2023 return is summarized from 1 December to 15 December 2023.

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