(1 March 2018, Hong Kong) As of 27 February, the Convoy MPF Composite Index reported 242.36, a monthly decrease of 2.97%, leading to a drop in the cumulative increase of the first two months to 2.55%. The Convoy MPF Equity Index also fell 4.11% month-on-month, resulting the highest single-month decline since January 2016. The Convoy MPF Bond Index also recorded a slight decrease of 0.64% in February. According to MPFA’s announcement that the number of MPF scheme members as of December 2016 was 4.19 million, each employee lost an average of $6,311 in February but still earned an average of $4,982 in the first two months of 2018.
The Fund Research Department of Convoy Asset Management Limited indicated that the global stock market fell sharply due to speculations about derivatives related to the VIX Index. As a result, US stocks plunged more than 1,000 points within two days in early February. Stock assets were sold especially a rapid drop in China fund with a month-on-month decrease of 6.01%. However, the January-to-date increase of 7.18% was still ahead of that of other funds. In terms of Bonds, the Federal Reserve raised its expected economic growth. Investors were worried that the rise in the bond market will drag the stock investment performance down, which pressurizes the bond market. As a result, the optimistic market outlook turned into a panic instantly while investors may find it difficult to recover emotionally in the short term. Yet, the short-term adjustment of the stock market has been completed owing to the clearly adjusted global stock market and satisfactory global economic data. The midterm may experience major fluctuations. The overall stock market is expected to perform better than the bond market in the first half of the year.
Kenrick Chung, Director of Product Management of Convoy Financial Services Limited, said that the Convoy MPF index in February fell along with the increased investment market volatility. As the new chairman of the Federal Reserve took office, many news of US rate hike hit that have a profound impact on the bond price. MPF scheme members should manage risk attentively while investors should pay attention to the market volatility. Scheme members with higher risk tolerance may consider continuing to buy China Equity Fund and scheme members with lower risk tolerance may consider the soft Guarantee Fund but should be aware of the guarantee terms.
Summary of Performance of MPF Key Fund Class in January
- Equity Fund:
- China Equity Fund performed the best, recorded a 6.01% decrease month-on-month and an 7.18% increase January-to-date
- European Equity Fund performed the worst this month, recorded a 4.01% decrease month-on-month and a 0.21% increase January-to-date
- Bonds Fund:
- RMB Bond Fund performed the best, recorded a 0.15% increase month-on-month and a 2.19% increase January-to-date
- Asian Bond performed the worst, recorded a decrease of 0.77% month-on-month and also a 0.04% decrease January-to-date
- Default Investment Strategy:
- The Core Accumulation Fund of the DIS decreased by 1.78% month-on-month, up by 11.03% April-to-date
- The Age 65 Plus Fund of the DIS decreased by 0.86% month-on-month, up by 2.93% April-to-date