This Tuesday (July 27), the Hong Kong Monetary Authority (HKMA) issued a press release announcing that the "Exchange Fund" had recorded unaudited investment income of HK$102.7 billion in the first half of 2021, including HK$12.5 billion from Hong Kong stock investment income. , Other stock investment income was 46.4 billion Hong Kong dollars, bond investment income was 1.3 billion Hong Kong dollars, the foreign exchange valuation of non-Hong Kong dollar assets was raised by 2.8 billion Hong Kong dollars, and other investment income was 39.7 billion Hong Kong dollars.
Compared with the income of 9.6 billion Hong Kong dollars in the same period in the first half of 2020, the increase is almost ten times as much.
The Chief Executive of the Monetary Authority, Yu Weiwen, believes that the main reason for the positive return of the Exchange Fund’s equity and debt portfolio is "continued loose monetary policy and fiscal measures, as well as increased vaccination rates, which will drive the global economy to gradually recover in the first half of 2021" and reiterated the The Bureau will continue to "carefully manage the Exchange Fund, continue to maintain flexibility, make appropriate defensive deployments, and maintain high liquidity to cope with possible financial turmoil, and to ensure that the Exchange Fund can continue to effectively maintain Hong Kong’s currency and Financial stability".
Yu Weiwen.
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Long growth portfolio performance is worthy of attention
It is worth noting that when the Hong Kong Monetary Authority announced the financial status of the Exchange Fund in July last year, it said: "The Exchange Fund recorded an investment loss of HK$10.6 billion in the first half of the year before the performance of the long-term growth portfolio in the second quarter." When the annual results were announced again in December, the bureau revised the relevant figures to 9.6 billion Hong Kong dollars in the annex, resulting in the difference between the two previous and unaudited figures describing the investment income during the same period as high as 20.2 billion Hong Kong dollars. It can even be called a "long-term growth portfolio." It is the key to turn losses into profits in the first half of 2020.
Looking at the information, the Exchange Fund has conducted a "long-term growth portfolio" investment in private equity and overseas real estate since 2009. As of 2020, the internal rate of return is 13.7%. In the past ten years, the Monetary Authority has announced the first half of the year in July. The financial situation of the Exchange Fund is generally too late to calculate the performance of the portfolio in the second quarter. However, the difference between the same group did not exceed HK$10 billion before the middle and the end of 2019. Taking advantage of this momentum, it seems that this year’s "long-term growth portfolio" should return. Will be quite strong.
Fund income should be returned to the local
The generous investment income of the Exchange Fund and the "Long-term Growth Portfolio" certainly means that the government's portion of it has also grown.
The Financial Secretary, Chen Maobo, stated in 2019 that he hoped to ask the HKMA to increase investment in the "long-term growth portfolio" of the future fund. In his latest "Budget" speech, he said that he would start to invest in this financial year. In the future, the accumulated investment income of the fund will gradually be transferred back to the government accounts, which means that these funds can be reclassified as public funds directly controlled by the government.
The Future Fund was announced during Zeng Junhua's tenure as treasurer.
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However, just as "Hong Kong 01" has repeatedly emphasized criticism in the past, the law clearly allows the Financial Secretary to transfer funds from the Exchange Fund to support government expenditures, but the authorities always refuse to use the relevant reserves under the pretext of supporting the linked exchange rate and stabilizing the exchange rate of the Hong Kong dollar. It is also said that through the establishment of a "Hong Kong Growth Portfolio" with part of the funds of the future fund for investment, it can help local development. It is completely unclear that they intend to use the large amount of money they have accumulated to improve the social and economic environment of Hong Kong.
Although the Hong Kong Government is now willing to set aside future fund returns in the Exchange Fund, it is still far from enough to support Hong Kong's large-scale reforms.
Faced with the increasingly serious deep-seated contradictions in Hong Kong today, those who govern Hong Kong must no longer allow public funds to accumulate meaninglessly. On the contrary, they must use all available resources to deal with the immediate problems as quickly as possible, including the Exchange Fund. None of the options should be easily ruled out.
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