Equities rout wiped out 7.38% from MPF in January-October

Citizens lost an average of $19,661 in the first ten months of 2018.

Hong Kong’s Mandatory Provident Fund (MPF) is on track to report its worst year since 2011 after booking a 7.38% loss in the first ten months of 2018 as deepening trade tensions and higher interest rates hammered stock markets across the world, reports South China Morning Post.

The slowdown mimics the subdued performance of the retirement scheme seven years ago when the MPF lost 8.41% due to the European debt crisis.

The bulk of this year's loss came from October’s equity rout where 430 MPF investment funds tracked by Refinitiv Lipper lost an average of 5.63% to record the worst monthly return since August 2015.

Employees covered by the retirement scheme lost an average of $19,661 (US$2,509) in the first ten months of the year with $14,046 in October alone, data from MPF consultant Convoy show.

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The losses stand in stark contrast to the performance of the scheme in 2017 when it gained 20.55% to book its second strongest performance on record after 2009.

Hong Kong’s benchmark Hang Seng Index (HSI) has plunged about 13% in 2018 in contrast to a 36% increase in 2017 whilst the Shanghai Composite Index is down by a fifth.

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The biggest loser are funds investing in South Korea which is down 23% in the first 10 months, and 16% in October alone followed by Greater China funds which lost 17% in the first 10 months and 12% in October.

US equity funds are the only category of stock funds that generated a positive return after gaining 0.89% in the first ten months, although they fell 8% in October.

“This has been a very difficult year to achieve positive returns from investment, due to the volatility of markets,” Stewart Aldcroft, chairman of Cititrust told SCMP.