Compulsory savings fund It is on track to report its best performance in four years in 2024, while most analysts believe next year’s performance will remain on a positive trajectory.
As of December 18, the fund’s 379 mutual funds had gained an estimated HK$102.8 billion (US$13.2 billion) for the year, marking the third time the fund’s gains had exceeded HK$100 billion, according to MPF Ratings, a firm. Independent research.
US stock funds were the best performers so far this year, achieving gains of 21.5 percent, while Japanese stock funds came in second with 18.7 percent. China and Hong Kong equity funds ranked third with 15.5 percent.
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Established in 2000, the MPF is a mandatory retirement program covering 4.7 million current and former workers.
Illustration of the MPF in Hong Kong, on March 29, 2018. Image: Martin Chan alt=Illustration of the MPF in Hong Kong, on March 29, 2018. Image: Martin Chan>
“Protectionism and deregulation appear to be Trump’s calling card, and while the rhetoric has proven popular for US stocks, there may also be unintended consequences,” Chung said. “MIFF members may tend to have a US bias in their portfolios, but diversification is important.”
MPF members could consider leaning more towards higher-risk assets in 2025, said Philip Tso, head of institutional business for Asia Pacific at Allianz Global Investors.
“As we enter 2025, following the decisive result in the US elections, the outlook for risk assets appears positive, with a soft landing on the horizon for the US and global economies despite the potential for future volatility,” Tsu said.
Trump’s promises to cut corporate taxes and deregulate should bring more positivity to the market and benefit companies’ margins, Tsu said.
People stood in front of a Christmas tree outside the New York Stock Exchange. Photo: AFP alt=People stand in front of a Christmas tree outside the New York Stock Exchange. Photo: Agence France-Presse
“If these measures lead to a period of calm in stock markets, investors may increase their positions in stocks,” he said. “We see this environment as particularly favorable for US stocks.”
As interest rates fall, MPF members who hold cash or low-risk money market funds can move into assets with moderate levels of risk, such as fixed income funds or equity funds, Tsu said.
“In a low interest rate environment, investors should adopt strategic approaches to their investments in their cash fund to maximize returns,” Tsu said. “Focusing on equity funds, especially those in growth sectors like technology and health care, may deliver better returns than traditional fixed income options.”
People stand near an electronic stock board displaying Japan’s Nikkei stock index at a stock company on December 23, 2024, in Tokyo. Photo: AP alt=People stand near an electronic stock board displaying Japan’s Nikkei stock index at a stock company on December 23, 2024, in Tokyo. Photo: AP>
Outside the United States, China recently unveiled a new $1.4 trillion package to restructure local government debt, which Zou described as a step in the right direction to support Chinese markets.
Mark Conine, chief investment officer at AIA, expects the outlook for the United States and China to be positive.
“US economic growth, lower bond yields and a benign outlook for risk assets provide a positive backdrop for 2025,” Conine said. “Rising expectations of economic support in China, if realized, will further support domestic market sentiment.”
“Investors are closely monitoring any policy initiatives after the president’s inauguration, especially on trade policy.”
Trump’s policy is likely to have a positive impact on US stocks Silent impact on Chinese marketsKenny Ng Lai Yen, strategist at Everbright Securities International, said:
He said, “Trump will implement tax reduction policies and pursue trade protectionism, which will be supportive of the US stock market.” “On the other hand, market concerns about Trump imposing tariffs on China may have a dampening effect on Chinese and Hong Kong stock markets.”
Overall, Ng believes that MPF in 2025 will continue to perform well due to strong momentum in the world’s major equity markets.
Elvin Yu, CEO of Goji Consulting, is not so optimistic.
“With the world’s two largest economies, the United States and China, likely to spend significant amounts of money to boost their domestic economies, and with the US economy operating near maximum capacity, it is easy to see inflationary pressures building next year.” The goods and services sector, Yu said.
Yu urged MPF members to adopt a flexible asset allocation in 2025 rather than adopting an overweight position in stocks.
“We will see very severe corrections, caused by a possible reversal of the ECB’s loose monetary policy.” US Federal Reserve Bank “High inflation threatens again,” Yu said. “Cash was garbage in 2023 and 2024. But it may be a more useful asset to own in 2025.”
