Mandatory Provident Fund's first-half gains hit eight-year high

Hong Kong's Mandatory Provident Fund recorded its strongest first-half performance in eight years, with the composite index surging 8.9 percent from January to June, according to data released on Monday by consulting firm GUM.

This robust growth also surpassed the 8.8-percent full-year gain achieved in 2023. The average MPF account holder saw a paper profit of HK$24,213 during the period. GUM projects that the full-year return could reach between 10 and 12 percent.

All three major asset classes delivered positive returns, with all 26 constituent fund categories posting gains, said GUM. The index of tracking Hong Kong stocks-based funds skyrocketed 22 percent, buoyed by an active initial public offering market and easing Sino-US trade tensions in second quarter. The overall equity fund Index posted a return of 11.7 percent, while mixed asset funds gained 9.4 percent and fixed-income funds rose 2.5 percent, data from GUM showed.

GUM forecasts a further 5- to 10-percent rise for Hong Kong equities in the second half, which would boost MPF returns.

The consultancy added that potential US interest rate cuts – possibly two totaling 0.5 percentage points in the second half – could enhance the performance of bond funds within the MPF system.

The Mandatory Provident Fund Schemes Authority in response reiterated that the pension fund scheme is a long-term investment spanning over 40 years and scheme members should view the MPF from a long-term investment perspective.

STAFF REPORTER