Low-level investments in big banks by MPF funds

Business | Stella Zhai 28 May 2020

A total of 259 mandatory provident funds invested in the shares of HSBC (0005) and Standard Chartered (2888) as of end-March, amounting to HK$12.8 billion, or 1.5 percent of total MPF assets, said Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury.

The two UK banks had earlier canceled their final dividend payments for 2019 and suspended following dividend payments at the request of the UK government.

"In fact, prices of individual MPF funds may be affected by individual events, such as the suspension of dividend payments by companies, resulting in short-term fund price fluctuations. Nevertheless, MPF is a long-term investment, and MPF scheme members are advised to focus on its fund performance in the long term," Hui said in the Legislative Council yesterday.

Hui said the dividend policy of individual companies would not have a significant impact on the investment return of the Exchange Fund, as its investments are diversified.

When asked about whether to take measures to attract the two banks to relocate their domiciles back to Hong Kong, Hui said the existing arrangement is operating smoothly and the Hong Kong Monetary Authority does not have plans to make any changes.

Each MPF investor had suffered a loss of HK$1,736 on average in May and a loss of HK$24,483 in the first five months this year, according to data from Morningstar Asia.

Among the investments, Hong Kong equities saw a 5.01 percent drop this month.

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