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
Facebook Twitter LinkedIn

image

 

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.

 

 

 

 

©2021 Morningstar. All rights reserved. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided as of the date written, solely for informational purposes; and subject to change at any time without notice. This content is not an offer to buy or sell any particular security and is not warranted to be correct, complete or accurate. Past performance is not a guarantee of future results. The Morningstar name and logo are registered marks of Morningstar, Inc. This article includes proprietary materials of Morningstar; reproduction, transcription or other use, by any means, in whole or in part, without prior, written consent of Morningstar is prohibited. This article is intended for general circulation, and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Morningstar Investment Management Asia Limited is licensed and regulated by the Hong Kong Securities and Futures Commission to provide investment research and investment advisory services to professional investors only. Morningstar Investment Adviser Singapore Pte. Limited is licensed by the Monetary Authority of Singapore to provide financial advisory services in Singapore. Either Morningstar Investment Management Asia Limited or Morningstar Investment Adviser Singapore Pte. Limited will be the entity responsible for the creation and distribution of the research services described in this article.

Facebook Twitter LinkedIn

About Author

Kate Lin, CAIA

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

© Copyright 2022 Morningstar Asia Ltd. All rights reserved.

Terms of Use        Privacy Policy