A Difficult Month for MPFs

Japan equity MPFs and two cash-like groups were the only categories that posted positive returns in September. 

Kate Lin, CAIA 06 October, 2021 | 15:16
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There was nowhere for investors to hide in the bloodbath of September, either the equity or the fixed income space.

Most global equity markets were lower for several reasons, while China’s property market liquidity weighed on the overall sentiment for Asia’s corporate bond markets.

On the macro front, investors started to act on the Fed’s signal to begin tapering its bond buying by the end of 2021. In Hong Kong’s MPF market, some of the outperformers in the past months, like U.S. Equity and Global Equity gave up year-to-date gains in September.

Another groups of funds that have struggled lately were China & Greater China Equity and Hong Kong Equity. In the third quarter alone, both categories posted a negative 14% return, becoming the worst performers. Eight of the bottom 10 belong to the Hong Kong equity category, apart from one each from the Europe and the U.S. equity group.

On the flip side, Japanese equities led MPF fund performance in September and in the third quarter and the category returned 3.2% and 5.0% on average, respectively. The category accounts for three of the top performers this month. The rest of the top 10 MPFs were money market funds that invest in cash-equivalent instruments denominated in Renminbi and Hong Kong dollar.

The resignation of Japan’s Prime Minister Yoshihide Suga, who was appointed just a year ago to take over from his predecessor Shinzo Abe, took the market by surprise. However, sentiments have been leaning toward to the positive side as investors are looking to the new cabinet’s policies related to economic recovery and fiscal stimulus. Fumio Kishida won the ruling party’s election and became Japan's 100th prime minister.





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About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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