HK Exchange Fund posts 18% decline in investment income
01 Aug 2012
The Hong Kong Monetary Authority's Exchange Fund posted an investment income of HK$38.1bn ($4.9bn) in the first half of 2012, a decline of 18% from a year ago.
It had a total return from bonds of HK$19.8bn, a valuation gain, and dividends from Hong Kong equities amounting to HK$9.6bn, from other equities amounting to HK$17.9bn. It suffered an exchange valuation loss of HK$10.4bn, mainly as a result of depreciation of other currencies against the US dollar and recorded a valuation gain on other investments amounting to HK$1.2bn.
The abridged balance sheet shows the total assets of the Exchange Fund stood at HK$2,554.4bn at the end of June 2012, an increase of HK$66.4bn compared with the end of 2011. Investment income in the first-half of 2011 was HK$46.4bn.
Aaccording to its Chief Executive Norman Chan, the HKMA will continue to manage the Exchange Fund prudently and pursue investment diversification in a gradual and orderly manner, . "In the second half of 2012, the global economy and financial markets will still be facing downside risks brought about by possible continued deterioration of the European sovereign debt crisis.
"As for the US economy, its growth momentum will continue to be constrained by a depressed housing market, persistently high unemployment and the negative impact of possible occurrence of the "fiscal cliff" in 2013."
Chan added the continued weaknesses in Europe and the US have begun to dampen exports and growth of emerging economies. "As a result, there will be great uncertainties and risks in the investment environment and sentiment of the global financial markets in the second half of the year."
Author: Richard Newell