【February 5, 2024】 – In January 2024, the “GUM MPF Composite Index” declined by 2.1% to 220.8 points. The “GUM MPF Equity Fund Index” dropped by 3.7% to 282.8 points. The “GUM MPF Mixed Asset Fund Index” decreased by 1.3% to 227.0 points. The “GUM MPF Fixed Income Fund Index” experienced a slight decline of 0.03% to 125.5 points. In January 2024, the average loss per member in the MPF was HK$5,032.
Table 1: Overall performance of MPF and average return in January 2024
| Index | Value | January Return (%) |
| GUM MPF Composite Index | 220.8 | -2.1% |
| GUM MPF Equity Fund Index | 282.8 | -3.7% |
| GUM MPF Mixed Asset Fund Index | 227.0 | -1.3% |
| GUM MPF Fixed Income Fund Index | 125.5 | -0.03% |
| Average MPF Gain/Loss Per Member Note 1 (HK$) | -$5,032 | |
Review and Outlook
In 2024, the global markets continue the trend from 2023, showing further polarization. “Interest rate cuts” will be the dominant theme driving the market this year. The Federal Reserve announced last week that it would maintain the interest rate at 5.25-5.5% in January, stating that it is not appropriate to lower the target range until there is more confidence in achieving sustained inflation near 2%. Federal Reserve Chairman Powell also expressed that the committee does not have sufficient confidence to cut rates at the March meeting.
Apart from interest rate cuts, other significant market factors include the US election, US-China relations, Israel-Palestine conflict, and Russia-Ukraine conflict among other geopolitical developments. In terms of US-China relations, the market will closely monitor trade frictions and progress in economic cooperation between the two countries. In China and Hong Kong, the central government’s stimulus policies have provided some support to the stock market. However, in the long term, the market still needs to monitor the impact of factors such as the real estate debt situation and etc.
Additionally, geopolitical risks such as the Israel-Palestine conflict and the Russia-Ukraine conflict may introduce uncertainty to the market.
Analysis of Equity Fund Performance
In January, the Japanese stock market performed well, rising 5.2%. The Japanese government has maintained extremely low interest rates in a high-interest environment, providing relatively cheap borrowing costs for businesses and promoting investment and economic activity. Additionally, the depreciation of the Japanese yen has had a positive impact on Japan’s exports and tourism industry, further driving the growth of the stock market. Furthermore, the interest shown by renowned investor Warren Buffett in the Japanese market has also garnered attention from investors, helping to boost market confidence.
At the same time, the stock markets in the United States and Europe also performed well. The U.S. economic data has been strong, particularly with the December non-farm payroll figures exceeding market expectations. Despite only a slight increase in inflation data, major stock market indices continue to show an upward trend. The preliminary GDP figures in the Eurozone met expectations, but the core inflation rate remains elevated, making it challenging to bring it down to the target level in the short term.
However, the performance of Asian, China and Hong Kong markets has been relatively weaker. The China and Hong Kong market has been affected by concerns over the “decoupling” of supply chains from China and issues related to the real estate sector, which have exerted downward pressure on stock market indices across the Asian region.
Table 2: Ranking of Equity Fund Performance According To January 2024 Return
| Ranking | Equity Sub-category Fund Index | January Return (%) |
| 1 | Japanese Equity Fund | 5.2% |
| 2 | Other Equity Fund | 2.2% |
| 3 | United States Equity Fund | 1.6% |
| 4 | Global Equity Fund | 0.5% |
| 5 | European Equity Fund | 0.2% |
| 6 | Asian Equity Fund | -3.3% |
| 7 | Greater China Equity Fund | -8.3% |
| 8 | Hong Kong Equity Fund | -9.6% |
| 9 | Hong Kong Equity Fund (Index Tracking) | -9.8% |
Analysis of Mixed Assets fund performance
In January, mixed asset funds generally experienced a decline in performance. This is primarily due to many mixed funds holding a certain proportion of China and Hong Kong market, which underperformed during this period. Additionally, the indication from the Federal Reserve that there may not be further interest rate cuts in March added pressure to the bond market.
However, funds with a broader regional distribution, such as the “Default Investment Strategy – Core Accumulation Fund,” performed relatively well in January, rising by 0.4%. These funds benefit from portfolio diversification across different regions, which helps mitigate the risk of a decline in a single regional market.
Table 3: Ranking of Mixed Assets Fund Performance According To January 2024 Return
| Ranking | Mixed Assets Sub-category Fund Index | January Return (%) |
| 1 | DIS Core Accumulation Fund | 0.4% |
| 2 | DIS Age 65 Plus Fund | -0.2% |
| 3 | Mixed Asset- (>20-40% Equity) Fund | -1.3% |
| 4 | Other Mixed Asset Fund | -1.4% |
| 5 | Mixed Asset- (>40-60% Equity) Fund | -1.6% |
| 6 | Dynamic Allocation Fund | -1.8% |
| 7 | Mixed Asset- (>60-80% Equity) Fund | -1.9% |
| 8 | Mixed Asset- (>80-100% Equity) Fund | -2.2% |
| 9 | Target-Date Fund | -2.5% |
Analysis of Fixed Income Fund Performance
The Fed announced last week that it would maintain interest rates unchanged and stated that it would not lower rates until inflation reaches the 2% target. This has put pressure on bond funds, resulting in a general decline in most funds, except for the “Conservative Fund” and the “Hong Kong Money Market Fund” that have performed relatively well.
Table 4: Ranking of Fixed Income Fund Performance According To January 2024 Return
| Ranking | Fixed Income Sub-category Fund Index | January Return (%) |
| 1 | Conservative Fund | 0.4% |
| 2 | HKD Money Market Fund | 0.3% |
| 3 | RMB Bond Fund | -0.1% |
| 4 | RMB & HKD Money Market Fund | -0.1% |
| 5 | Asian Bond Fund | -0.2% |
| 6 | Hong Kong Dollar Bond | -0.3% |
| 7 | Guaranteed Fund | -0.4% |
| 8 | Global Bond Fund | -1.1% |
Remarks:
The average MPF return per member is calculated using total MPF assets of the previous month. The latest average assets per member was HK$243,076 as of 31 December 2023. The number of MPF Scheme members was 4,694,000 as of 31 March 2023. The GUM MPF Composite Index return for January 2024 as of January 31, 2024.
*The growth of all fund categories indexes is calculated by asset-weighted point-to-point growth. The data for January 2024 return is summarized from 1 January to 31 January 2024.
中文版本：
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