Hong Kong Wealth Fund has joined other funds round the world in posting losses at the beginning of the year as the markets remain volatile due to the corona-virus outbreak. Hong Kong’s economy is facing a second- year recession which was hit by corona-virus as well as anti-government protests.
Hong Kong’s wealth fund has suffered loss of about $11 billion as stocks fell globally adding fiscal pressure over the city and preparing it for its worst ever economic contraction this year.
Since 1998, Hong Kong has lost H.K$111.5 billion over domestic as well as foreign stocks on the other hand bond has gained H.K$54.4 billion in quarter, currently managed by Hong Kong Monetary Authority.
They are choosing to focus on the outcome which seems difficult given the pandemic, pace of the economic recovery and trade tensions. Despite relying onto the short – term gains and losses they are focusing on the long- term returns.
The Hong Kong fund is solely dependent on H.K$4 trillion fund which now is acting as a backstop to ensure the stability of the currency in the times of crisis.
The city has been surviving on the currency reserves to ease the pressure facing by the Hong Kong dollar. H.K dollar is continuously at the counter part with US dollar. And funds are frequently flowed into the Hong Kong Dollar to take advantage of the higher interest rates.
It has been also investing in private equity and real estate with an overall return of 6.6% last year. The fund also is lowering the assets in currencies other than U.S and H.K dollars as they now constitute less than 10% of fund’s assets.
But as the situation improvises and the outbreak under control – with no new cases reported over the past two weeks, the city is facing fresh political unrest and refueling the economy to avoid major consequences.