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US-China Trade War Escalated Stock Market Falls Sharply Convoy MPF Composition Index Decreased 4.62%

(31 ,May 2019─ Hong Kong) As of 22 May, the Convoy MPF Composition Index was 226.49, with a 4.62% month-to-month decrease. The Convoy MPF Equity Index was 241.76 with a decrease in 6.90% on a monthly basis, while the Convoy MPF Bond Index was 156.61, with a slight monthly increase of 0.29%. Ms. Bonita Leong, Group Chief Product and Strategy Officer, Convoy Global Holdings Limited, said that as the market is still very volatile, we recommend not rushing to disinvest right now and staying invested for long-term portfolio growth, even for those near retirement who do not need to dip into their MPF, for living expenses soon.

 

Investment Sentiment Deteriorated  Stock Market Falls Sharply

As the investment sentiment in May deteriorated, all the MPF Equity sector was driven lower. The Greater China regional equity funds were hit harder after the strong run in the beginning of the year. However, the developed market equities were better off, and the best performing MPF Equity sector was the United States Equity Fund. Moreover, the Defensive Mixed Asset Funds did well in the market downturn, among which Default Investment Strategy – Age 65 Plus Fund was the only mixed asset sector that recorded positive return. Primarily dragged by funds with RMB exposures, Money Market Fund – Other than MPF Conservative Fund fell by 1.36%. Despite the equity sell-off, there were a few equity funds that recorded positive returns, including the top performing MPF fund in May which invests primarily into healthcare equities.

 

The US-China trade war became more intense. US President Donald Trump accused Beijing of trying to renegotiate terms for the trade deal that had been agreed after months of negotiation and decided to subsequently raise the tariffs on USD 200 billion worth of Chinese goods, and then forbid US companies from doing businesses with Huawei. In response to the US’s action, China imposed retaliatory tariffs on USD 60 billion worth of US goods. Investment sentiments were hit by the news, driving global stock markets lower, especially cyclicals and trade sensitive sectors, including materials, finance, industrial and technology. The equity market which uptrend in the first four months of the year was also disrupted by the news, with a month-on-month decrease of 6.90%. China was hit harder compared to its peers as the escalating trade tension coincided with the weak economic data released such as auto sales, exports and imports which failed to meet expectations. Safe-haven assets also benefited from the market rotations as inflows drove sovereign bond yields lower in developed markets.

Photo 1: Ms. Bonita Leong, Group Chief Product and Strategy Officer, Convoy Global Holdings Limited said that, as the market is still very volatile, we recommend not rushing to disinvest right now and staying invested for long-term portfolio growth, even for those near retirement who do not need to dip into their MPF, for living expenses soon.

 

Summary of Performance of MPF Key Funds Class in May:

  • Equity Funds:
    • United States Equity Funds performed the best with a 1.46% month-on-month decrease and a 21.40% January–to-date increase
    • China Equity Funds performed the worst, recorded a monthly decrease of 11.42% and a 5.03% January-to-date increase
       
  • Bonds Funds:
    • Hong Kong Dollar Bond Funds performed the best, recorded a monthly increase of 0.66% and a 2.51% January-to-date increase
    • United States Bond Funds performed the worst , recorded a 1.72% month-on-month decrease and a 1.67% January–to-date increase

 

  • Default Investment Strategy:
    • Mixed Asset-DIS Age 65 Plus was the only mixed asset sector that recorded positive return, with a monthly increase of 0.23% and a 5.14% January-to-date increase
    • Mixed Asset – 81% to 100% was the worst performing mixed asset sector, recorded a 5.03% month-on-month decrease and a 9.80% January–to-date increase

 

Convoy MPF Index Trend

  • SOURCE: CONVOY FINANCIAL SERVICES LIMITED
  • COMPILED BY THE CONVOY FINANCIAL SERVICES LIMITED
  • DISCLAIMER: THE CONTENT IS FOR REFERENCE ONLY AND DOES NOT CONSTITUTE ANY SUGGESTION AND OFFER FOR INVESTMENT. PLEASE DO NOT RELY ON THIS ARTICLE FOR YOUR INVESTMENT DECISION. INVESTMENT INVOLVES ELEMENTSOF RISK AND THE HISTORICAL DATA OF THE FUNDS IS NOT NECESSARILY AN INDICATOR OF THEIR FUTURE PERFORMANCE.CONVOY FINANCIAL SERVICES LIMITED ("CONVOY") HAS UNDERTAKEN REASONABLE EFFORT TO PREPARE THE CONVOY MPFINDICES. CONVOY CANNOT GUARANTEE THE ACCURACY

 

 

Performance of Key Funds Classes:

 MPF Fund Sectors

Month-on-month

January-to-date*

Asian Equity Fund

-7.33

6.02

China Equity Fund

-11.42

5.03

Europe Equity Fund

-3.99

11.71

Global Equity Fund

-3.19

14.52

Greater China Equity Fund

-9.79

7.96

Hong Kong Equity Fund

-8.84

8.03

Hong Kong Equity Fund (Index Tracking)

-7.81

8.35

Japan Equity Fund

-3.62

6.08

United States Equity Fund

-1.46

21.40

Uncategorized Equity Fund

-3.51

10.65

Asia Bond Fund

-1.00

1.86

Global Bond Fund

0.35

2.06

Hong Kong Dollar Bond Fund

0.66

2.51

RMB Bond Fund

-1.72

1.67

Guaranteed Fund

-0.48

2.25

Mixed Assets Fund (21% to 40% equity)

-1.53

4.59

Mixed Assets Fund (41% to 60% equity)

-2.68

6.37

Mixed Assets Fund (61% to 80% equity)

-3.88

7.80

Mixed Assets Fund (81% to 100% equity)

-5.03

9.80

Default Investment Strategy – Age 65 Plus Fund

0.23

5.14

Default Investment Strategy–Core Accumulation Fund

-1.45

10.13

Uncategorized Mixed Assets Fund

-3.96

8.78

MPF Conservative Fund

0.09

0.42

Money Market Fund – Other than MPF Conservative Fund

-1.36

0.64

 

#MPF FUND SECTORS BASED ON MPFA CLASSIFICATION

*PERFORMANCE IS CALCULATED FROM 17 APRIL 2019 TO 22 MAY 2019; PERFORMANCE OF JANUARY-TO-DATE IS CALCULATED FROM 24 DECEMBER 2018

SOURCE: CONVOY FINANCIAL SERVICES LIMITED

COMPILED BY THE CONVOY FINANCIAL SERVICES LIMITED

DISCLAIMER: THE CONTENT IS FOR REFERENCE ONLY AND DOES NOT CONSTITUTE ANY SUGGESTION AND OFFER FOR INVESTMENT. PLEASE DO NOT RELY ON THIS ARTICLE FOR YOUR INVESTMENT DECISION. INVESTMENT INVOLVES ELEMENTSOF RISK AND THE HISTORICAL DATA OF THE FUNDSS IS NOT NECESSARILY AN INDICATOR OF THEIR FUTURE PERFORMANCE.CONVOY FINANCIAL SERVICES LIMITED ("CONVOY") HAS UNDERTAKEN REASONABLE EFFORT TO PREPARE THE CONVOY MPFINDICES. CONVOY CANNOT GUARANTEE THE ACCURACY

 

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