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US-China Phase 1 Deal agreed  Global market sentiment improved Uncertainty risks remain
Convoy MPF Composite Index recorded an increase of 2.09%

(30, December 2019—Hong Kong) As of 18 December, the Convoy MPF Composite Index was 240.17, with a 2.09% month-to-month increase, due mostly to the positive news of the US-China trade talks.

 

Positive news on US-China trade talks Global economic situation improved

After the global economy experienced a period of instability, the markets have become increasingly optimistic and the green shoots of recovery have continued. However, the risks have not been completely eliminated. Globally, the biggest story of the month was the news about the US and China agreeing on a Phase 1 Deal, in which China is asked to commit to purchasing US$40 billion worth of US agricultural goods annually, including protections for US intellectual property and refraining from deliberate devaluation of its currency. The result of this is that the US has agreed not to escalate levies as planned and reduce tariffs on US$120 billion of imports from 15% to 7.5%. As the deal will not be officially signed until January 2020, there may be ups and downs the time in between.

 

Generally speaking, markets have on the whole reacted to the news positively. The US stock market was boosted by upbeat reports on manufacturing and the housing market, as well as the positive news on US-China trade negotiations. It once again touched record highs and is currently on course for its best year since 2013.

 

PMI numbers strengthened for US, the Eurozone and Japan, suggesting a stabilization and improvement of the global macro-economic picture. Emerging markets, however, lagged behind their developed counterparts, with a strengthening dollar weighing on the performance of the largely export-driven economies. Protests in Chile have paralyzed the country, while US President Donald Trump has threatened to start a new trade war with Brazil and Argentina due to the massive devaluation of their currencies. Combined with similar threats to France over their plans to levy a digital sales tax on large US tech firms, it means that even if the trade talks progress smoothly, trade wars may continue.

 

Finally, UK stocks jumped, and the pound surged on news that UK Prime Minister Boris Johnson’s Conservatives had secured a large majority in the general election. The market expected that the result would remove the political deadlock caused by Brexit but stocks and sterling soon pulled back, as Boris Johnson signaled his intent to pass legislation that could cause the UK to crash out of the European Union at the end of next year if a trade deal cannot be agreed.

 

Ms. Bonita Leong, Group Chief Product and Strategy Officer, Convoy Global Holdings Limited, said that investors need a balanced mix of funds for a more stable long-term return. As evidenced, funds that do well in some periods, do not do as well in other periods, for example, the US Equity funds had the highest return year-to-date, but in recent months, the Greater China funds have been doing better. In the continuing uncertain local and global markets, it is difficult to time the market and to make a decision on the ideal choice and mix of funds for the longer term. The DIS Core Accumulation funds are a convenient choice, if you want to contribute for a better retirement, but you are not confident to make the decision to choose the mix of funds yourself. The Convoy MPF DIS Core Accumulation Index returned 18.59% year-to-date, outperforming the Convoy MPF Composite Index by 4.85%, which returned 13.74% year-to-date.

 

 

 

Summary of Performance of MPF Key Funds Class in December:

 

Equity Funds:

Greater China Equity was easily the best performing sector returning 5.16%, a rally in the sector coincided with the announcement on the US China Phase 1 trade deal which lead to the US pledging to reverse some of the tariffs it had previously imposed.

The Japanese equity sector fell from being the best performing sector in the previous month to the worst performing Equity sector this month returning just 1.63%.

Despite the market hitting record highs over the period the United states Equity sector returned just 2.06%.

 

Bond Funds:

Fixed Interest sectors were once again the worst performing sectors, being the only sectors to produce negative returns. The Asia, HKD and Global sectors all finished in the red returning -0.25%, -0.29% and -0.53% respectively. The only exception was RMB which eked out a 0.10% return. Bond fund performance continues to decline, as positive sentiments return to equities, although this could quickly reverse should sentiment turn. 

 

Mixed Assets Funds:

Given the more risk on environment which boosted equities and dragged on fixed interest, it is unsurprising that the more aggressive mixed asset sectors outperformed, with the 81% to 100% returning 2.75% compared to 2.00% for 61-80%, 1.33% for 41% to 60% and 0.57% for 21% to 40%.

 

 

Convoy MPF Index Trend

n   SOURCE: CONVOY FINANCIAL SERVICES LIMITED

n   COMPILED BY THE CONVOY FINANCIAL SERVICES LIMITED

n   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 Convoy MPF Indexes:

MPF Indexes

December

Month-on-month

January-to-date

Convoy MPF Composite Index

240.17

2.09%

13.74%

Convoy MPF Equity Index

260.78

3.49%

17.88%

Convoy MPF Bond Index

160.04

-0.45%

4.39%

Convoy MPF DIS Core Accumulation Index

105.54

1.33%

18.59%

Convoy MPF DIS Age 65 Plus Index

102.90

0.08%

10.47%

 

 

Performance of Key Funds Classes:

MPF Fund Sectors#

Month-on-month%

January-to-date%*

Asian Equity Fund

3.59

15.69

China Equity Fund

3.72

14.30

Europe Equity Fund

2.81

20.96

Global Equity Fund

2.45

25.67

Greater China Equity Fund

5.16

23.77

Hong Kong Equity Fund

3.93

13.91

Hong Kong Equity Fund (Index Tracking)

3.37

11.08

Japan Equity Fund

1.63

19.60

United States Equity Fund

2.06

33.28

Uncategorized Equity Fund

2.50

17.44

Asia Bond Fund

-0.25

5.19

Global Bond Fund

-0.53

4.53

Hong Kong Dollar Bond Fund

-0.29

4.01

RMB Bond Fund

0.10

2.21

Guaranteed Fund

0.14

3.78

Mixed Assets Fund (21% to 40% equity)

0.57

9.17

Mixed Assets Fund (41% to 60% equity)

1.33

12.49

Mixed Assets Fund (61% to 80% equity)

2.00

15.21

Mixed Assets Fund (81% to 100% equity)

2.75

18.96

Default Investment Strategy – Age 65 Plus Fund

0.06

10.22

Default Investment Strategy–Core Accumulation Fund

1.30

18.18

Uncategorized Mixed Assets Fund

2.17

17.16

MPF Conservative Fund

0.10

1.12

Money Market Fund – Other than MPF Conservative Fund

0.10

0.70

 

#MPF FUND SECTORS BASED ON MPFA CLASSIFICATION
*PERFORMANCE IS CALCULATED FROM 20 NOVEMBER 2019 TO 18 DECEMBER 2019; PERFORMANCE OF JANUARY-TO-DATE IS CALCULATED FROM 24 DECEMBER 2018
THE TABLE COVERS ALL MPF CONSTITUENT FUNDS IS CALCULATED USING AN EQUALLY WEIGHTED APPROACH AMONG ALL MPF CONSTITUENT FUNDS.

 

nSOURCE: CONVOY FINANCIAL SERVICES LIMITED

nCOMPILED BY THE CONVOY FINANCIAL SERVICES LIMITED

nDISCLAIMER: 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

Photo: Ms. Bonita Leong, Group Chief Product and Strategy Officer, Convoy Global Holdings Limited, said that investors need a balanced mix of funds for a more stable long term return. As evidenced, funds that do well in some periods, do not do as well in other periods, for example, the US Equity funds had the highest return year-to-date, but in recent months, the Greater China funds have been doing better. In the continuing uncertain local and global markets, it is difficult to time the market and to make a decision on the ideal choice and mix of funds for the longer term. The DIS Core Accumulation funds are a convenient choice, if you want to contribute for a better retirement, but you are not confident to make the decision to choose the mix of funds yourself. The Convoy MPF DIS Core Accumulation Index returned 18.59% year-to-date, outperforming the Convoy MPF Composite Index by 4.85%, which returned 13.74% year-to-date.

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