Hong Kong Exchange Fund's investment income tumbled in 2020

HONG KONG: Investment income from Hong Kong's Exchange Fund fell by 24.6% to HK$197.80 billion ($25.52 billion) in 2020, the Hong Kong Monetary Authority (HKMA) said on Wednesday.

The Exchange Fund, which is managed by HKMA and is used to back the Hong Kong dollar, reported investment income of HK$262.2 billion in 2019. Controlled by Hong Kong's financial secretary, it invests in equities, bonds, foreign exchange and other securities and assets.

HKMA said the coronavirus crisis had posed significant challenges to the world economy but asset markets had rebounded quickly from sharp corrections thanks to ultra-loose monetary policies implemented by major central banks and relief measures launched by various governments.

This recovery was reflected in the Exchange Fund's investment income for the fourth quarter which was HK$107.0 billion, up 31.7% from an adjusted HK$81.2 billion of investment income in the previous quarter, according to HKMA data.

"The main focus for 2021 will be the timing and pace of recovery of different economies," Eddie Yue, HKMA chief executive, told a news briefing.

"Global recovery is in sight but the evolving pandemic will still have a bearing on the global economic outlook," Yue said.

Geopolitical risks including the policy direction of the new US administration and China-US relations remained a cause for concern, he added.

The Exchange Fund made lower gains on its bond holdings during 2020, with a fall of 19.2% to HK$92.5 billion, while income from Hong Kong and other equities reached HK$4 billion and HK$69 billon respectively last year, compared with HK$22.1 billon and HK$100.7 billion in 2019.