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Convoy MPF Composite Index plunged more than 7% month-on-month
Employees lost almost $20,000 in average January-to-date

(2 November 2018 – Hong Kong) As of 25 October, the Convoy MPF Composite Index was 213.74, the largest monthly decrease of 7.10% month-on-month since January 2016. It also represents a 9.56% decrease January-to-date. According to the MPFA's announcement, the number of MPF scheme members was 4.27 million as of December 2017. Each employee lost an average of $19,661.71 in this year so far and recorded an average loss of $14,046.49 in October.

 

Plunge in US stocks causes the huge fall in global market

 

Convoy Financial Services Limited said that the US stock market faced sharp fluctuations in October. With the worse-than-expected third-quarter results of some industrial and technology companies as well as the weakened performance of some economic data, an optimism outlook for U.S. stocks by investors since the start of the year has been affected. The tech-heavy Nasdaq index fell more than 10% in October, vaporising most of the gains of this year. On the other hand, according to the latest budget of the Italian government, the country wants to increase the spending. As a result, the deficit will be pushed to 2.4% of GDP which will violate the EU regulations. As the two sides did not give in, the stalemate not only caused Italian and other European stocks to fall, but also widened the spreads between the government bonds of Germany and Italy to the highest level since the European debt crisis. Since the US stocks retreated sharply and Italy’s debt crisis triggered panic among investors, the global stock markets plummeted again in October. Apart from Europe and the US, some Asian markets also recorded a double-digit decline.

 

The MPF performance followed the market volatility. In October, Japanese equity funds, the best-performing fund in September, lost all its gains from September and fell more than 11% year-to-date. The US stocks, which is the best-performing in 2018, also retreated most of the gains. These reflected investors' rapid selling of stock and its related assets under panic. The categories that recorded positive returns this month were HKD Money Market Funds, HKD Bond Funds and MPF Conservative Funds, which rose slightly by 0.13%, 0.03% and 0.07% respectively.

 

Although interest rates put pressure on bonds, the overall bond funds showed resilience in October. The Convoy MPF Bond Index fell 0.48% month-on-month and 2.94% year-to-date.

 

As the market is still full of uncertainties and there will be a Midterm Election in the US on November 6, it is expected that the market will continue to fluctuate in the short term. At the same time, the impacts of the trade tariffs on US companies began to surface, hitting investors’ confidence. Although some stock markets have dropped to attractive levels, given that the market may still fluctuate in the short term and the MPF is for long-term investment, investors should adjust their investment strategy by phases after the markets are less uncertain.

 

Summary of Performance of MPF Key Funds Class in October:

  • Equity Funds:
    • US Equity Funds performed well relatively, with a 7.82% decrease month-on-month and an 0.55% increase January-to-date.
    • Asia Pacific (Ex-Japan) Equity Funds performed the worst, with a 11.69% decrease month-on-month and a 16.31% decrease January-to-date.
  • Bonds Funds:
    • HKD Bond Funds performed well relatively, with an 0.03% increase month-on-month and a 1.78% decrease January-to-date.
    • Asian Bond Funds performed the worst, with a 0.70% decrease month-on-month and a 3.82% decrease January-to-date.
  • Default Investment Strategy:
    • The Core Accumulation Funds of the DIS decreased by 5.15% month-on-month and by 3.55% January-to-date.
    • The Age 65 Plus Funds of the DIS decreased by 1.86% month-on-month and by 2.14% January-to-date.

 

Convoy MPF Index Trend

  • SOURCE: CONVOY FINANCIAL SERVICES LIMITED, WEBSITE OF MPFA AND THOMSON REUTERS LIPPER
  • 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 ELEMENTS OF 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 MPF INDICES. CONVOY CANNOT GUARANTEE THE ACCURACY

 

 

Performance of Key Funds Classes:

Funds Classes

Month-On-Month

January-To-Date*

Asia (Ex-Japan) Equity Funds

-10.82%

-18.29%

Asia (Ex-Japan and Hong Kong) Equity Funds

-10.96%

-16.35%

Asia Bond Funds

-0.70%

-3.82%

China Equity Funds

-9.28%

-13.59%

European Equity Funds

-8.99%

-11.06%

Global Bond Funds

-0.65%

-3.24%

Global Equity Funds

-8.57%

-6.35%

Greater China Equity Funds

-11.33%

-17.75%

Guarantee Funds

-1.20%

-2.64%

HKD Bond Funds

0.03%

-1.78%

HKD Money Market Funds

0.13%

0.58%

Hong Kong Equity Funds

-10.42%

-16.46%

Hong Kong Equity (Index Tracking) Funds

-9.54%

-13.75%

Japan Equity Funds

-11.16%

-11.71%

Lifestyle Funds – (>20% - 40% Equity)

-3.50%

-5.89%

Lifestyle Funds – (>40% - 60% Equity)

-5.31%

-7.68%

Lifestyle Funds – (>60% - 80% Equity)

-7.20%

-9.49%

Lifestyle Funds – (>80% - 100% Equity)

-9.16%

-11.53%

MPF Conservative Funds

0.07%

0.41%

Other Funds

-7.33%

-9.12%

Asia Pacific (Ex-Japan) Equity Funds

-11.69%

-16.31%

RMB and HKD Money Market Funds

-0.44%

-2.48%

RMB Bond Funds

-0.41%

-1.51%

US Equity Funds

-7.82%

0.55%

DIS – Age 65 Plus Funds

-1.86%

-2.14%

DIS – Core Accumulation Funds

-5.15%

-3.55%

* Performance is calculated from 31 DECEMBER 2017 to 25 OCTOBER 2018

SOURCE: CONVOY FINANCIAL SERVICES LIMITED, WEBSITE OF MPFA AND THOMSON REUTERS LIPPER

COMPILED BY 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 ELEMENTS OF 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 MPF INDICES. CONVOY CANNOT GUARANTEE THE ACCURACY

 

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